MSCB floats special loan scheme for sugar mills

By: | Published: December 3, 2015 1:20 AM

Sugar mills in Maharashtra will have more money in hand to make fair and remunerative price ( FRP) payments to farmers for the 2015-16 season as Maharashtra State Cooperative Bank...

Sugar mills in Maharashtra will have more money in hand to make fair and remunerative price ( FRP) payments to farmers for the 2015-16 season as Maharashtra State Cooperative Bank (MSCB) has decided to float a special 5% margin money loan scheme to help them recoup the gap in making FRP payments, top bank officials said. Mills will now receive around R1,400 per quintal to make cane payments to farmers, Pramod Karnad, MD of  MSCB, said. Last month, the cane payment amount was R1,180 per quintal.

The scheme will only be for the 2015-16 season.

The decision was taken after a meeting with chief minister Devendra Fadnavis, state cooperation minister Chandrakant Patil and state agriculture minister Eknath Khadse, where bank officials were requested to reduce the margins from 15% to 10% to enable mills to receive around 90% funds of the valuations.

As per the normal practice, the bank usually gives 85% funds to mills leaving 15% margins to overcome any volatility in the market, Karnad said. “However, this time following the request, the bank has agreed to give 90% of the funds to mills subject to the condition that the additional 5% will be given as a soft loan as part of the working capital requirement of the mills.”

Sanjeev Babar, MD, Maharashtra State Cooperative Sugar Factories Federation, termed this scheme as a positive step that will give mills more funds in hand to make cane payments. Although this is still a loan, at this point, mills will find it handy to get additional funds from the bank, he said.

MSCB has raised valuations to R2,385 per quintal as on December 1, compared with R2,270 in November. Following the rise in valuations, the pledge rate has been increased to R2,025 per quintal, against R1,930, and the cane payment amount will now come up to R1,275 per quintal. It was R1,180 per quintal in November.

However, now that the bank has decided to float this 5% special margin money soft loan scheme, farmers are eligible to receive R1,400 per quintal and the amount will directly be debited into accounts of cane growers, Karnad said.

This means that sugar mills in the state will now receive at least R220 per quintal in hand for payments.

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