The finance minister, P Chidambaram, while meeting the heads of state-run banks in New Delhi on Tuesday, has asked the public sector banks to implement sugar package within 10 days and submit a report before the government. The Indian Banks? Association (IBA), the trade body of bankers, is going to discuss the issue at length during its forthcoming managing committee meet to be held on February 15 in Mumbai. More interestingly, the State Bank of India and few other state-run banks have already issued letters through their circles and regions to comply the government?s instruction in this direction.
KC Chakraborty, chairman and managing director of Punjab National Bank, told FE over phone that whatever applications had come to our bank, we?ve already cleared them. The FM was only concerned about those banks that were lagging behind, he added. Chief executive officer of Indian Banks? Association, HN Sinor, who was part of the delegation that met FM in New Delhi on Tuesday, said that all the state-run banks have been asked by the FM to provide loans to the sugar industry towards the payment of excise duty and others.
As part of the sugar package that has been announced by the government, full interest subvention would be provided to all scheduled commercial banks, regional rural banks and cooperative banks for the total duration of the loan (four years including two years moratorium). The interest subvention would be limited to 12% per annum of which 5% would be met out of general budget provisions of the Centre and the remaining 7% from the Sugar Development Fund. The FM expressed concern over the decline in the credit quality, a mention of which was made by the RBI during its credit review report for the third term on January 29.
Besides, the FM went through the copy of memorandum which had already been submitted by the IBA before his ministry in January and assured the bankers that he will bear in mind the points while preparing the annual Budget later this month.