Recover dues from sugar mills by tagging bags, Maharashtra tells banks

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September 30, 2021 8:28 AM

According to officials, these mills owe the government around Rs 3,600 crore till date. The government in the past stood in as guarantor for several mills for loans obtained from cooperative and nationalised banks.

sugar millsSugar mills will be required to submit a letter of guarantee to the sugar commissioner along with their crushing licence guaranteeing recovery of government dues through tagging, he said.

The Maharashtra Sugar Commissionerate has directed cooperative and nationalised banks in the state that provide mortgage loans to sugar mills to collect government dues by tagging sugar bags pledged with these banks in the crushing season of 2021-22. According to officials, these mills owe the government around Rs 3,600 crore till date.
The government in the past stood in as guarantor for several mills for loans obtained from cooperative and nationalised banks. But this is not possible now as the Reserve Bank of India (RBI) and NABARD have said mills with a negative net disposable resource (NDR) cannot be given loans by banks.

The government also provided share capital for cogeneration projects of some of the mills. Several mills had taken loans from the Maharashtra State Cooperative Bank (MSCB), Mumbai Bank and Nanded and Osmanabad District Central Cooperative Banks where the government was the guarantor, and failed to repay. The government has, therefore, decided to recover these loans from the defaulter mills. A decision to this effect was taken at the recent meeting of the group of ministers.

Shekhar Gaikwad, sugar commissioner, said around 53 mills have been identified for defaulting on payments and a circular has been issued notifying banks to take note of this decision. Banks have been directed to deduct the amount from sugar sales of the factories by tagging sugar bags at a rate of Rs 50 per quintal and Rs 25 per quintal depending on their cane payment history.

Sugar mills will be required to submit a letter of guarantee to the sugar commissioner along with their crushing licence guaranteeing recovery of government dues through tagging, he said.

The commissionerate has asked farmers to beware of the financial status of the mills before supplying sugarcane to them. The commissionerate has prepared a color-coded list of mills based on their payment behaviour.

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