A pan-India auction introduced by the Tea Board has severely been hampered as the facilitators of the e-auctions, Bank of India and NSEIT, have “failed” to meet the payment settlement requirements of the traders, the apex body of the country’s tea producers, Indian Tea Association (ITA), said on Wednesday.
The Tea Board introduced the pan-India e-auction in June this year at all the tea auction centres. For this purpose, the board selected Bank of India as the settlement bank from the middle of this month.
“It has severely hampered post-auction operations as the settlement bank & NSEIT, the facilitators of the e-auction system, have failed to interact in-depth with the auction organisers and grasp the requirements of the associated stake holders namely sellers, buyers, auctioneers and warehouses operating in the auction system,” ITA said in a release.
NSEIT, the software developer of the e-auction platform, has developed the post-auction module and is running the system. In the earlier e-auction process, State Bank of India and IndusInd Bank had been handling the payment-settlement processes.
ITA on Wednesday said Bank of India and NSEIT could not “satisfactorily resolve” many concerned issues. “Delivery orders, which are negotiable instruments for delivery of tea worth crores of rupees, are being issued with digital signatures without proper infrastructure for verification of their authenticity by the warehouses prior to delivery of teas to buyers. This has increased the risk in the auction system,” the tea producers’ body said.
Moreover, prompt payments could not be reconciled under the new process as payments from buyers were being kept in the settlement accounts and were not being remitted to sellers, it said, adding brokers were unable to reconcile tax invoices and account sales due to numerous errors in total packages, net weights, sale dates, VAT, service tax and Tea Board charges, which remained to be addressed by the NSEIT.
According to ITA, despite all efforts of the Tea Board, pan-India auctions have so far been unable to generate competition for a fair price discovery for the tea makers. Many producers are compelled to sell tea well below the cost of production and it will have serious consequences in the future on the sustainability of the industry.