Co-op banks turn away 55 sugar mills in Maharashtra

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Published: November 27, 2019 12:11:03 AM

Earlier this year, the Maharashtra State Cooperative Sugar Factories Federation (MSCFF) had sought clarity on guidelines from the RBI and Nabard for the utilisation of the Centre’s scheme for a soft loan of Rs 10,540 crore.

sugar, sugar industryThe Centre had announced a soft loan of Rs 10,540 crore for payment of Fair and Remunerative Price (FRP) in the sugar season of 2019-20.

Around 55 sugar mills in Maharashtra may find it difficult to commence crushing in 2019-20 sugar season since they have been turned away by the Maharashtra State Cooperative Bank (MSC), the state’s apex cooperative bank, and district cooperative banks because of their negative net worth and net disposable resources (NDRs).

At a meeting convened by Maharashtra sugar commissioner Shekhar Gaikwad to review the financial position of mills, the MSC Bank is reported to have stated that the sectoral exposure limit of the bank to the sugar sector had been exhausted and the bank was not in a position to issue pre-season loans to mills.

Gaikwad confirmed that MSC Bank officials had raised concerns over extending loans as their exposure limit to the sugar sector had already exhausted.

These 55 mills can approach other public sector banks for loans, he said, adding that Nabard has also stated that these mills cannot be funded unless a government guarantee is given.

Some other issues raised by sugar mill owners include seeking an increase in the sectoral exposure of Nabard to this sector, restructuring of loans, government guarantee for mills with negative net worth or negative NDRs, revised guidelines by Nabard for the season and NoCs for loans from the government for those factories that have been set up on government land.

The commissioner said that these issues were proposed to be discussed with the governor on November 27 but now the meeting has been postponed due to the political developments in the state.

Earlier this year, the Maharashtra State Cooperative Sugar Factories Federation (MSCFF) had sought clarity on guidelines from the RBI and Nabard for the utilisation of the Centre’s scheme for a soft loan of Rs 10,540 crore. The Centre had announced a soft loan of Rs 10,540 crore for payment of Fair and Remunerative Price (FRP) in the sugar season of 2019-20.

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