Maharashtra banks stonewall mills by clearing only 25 per cent soft loans to pay off cane dueshttps://indianexpress.com/article/cities/pune/maharashtra-banks-stonewall-mills-by-clearing-only-25-per-cent-soft-loans-to-pay-off-cane-dues-5726258/

Maharashtra banks stonewall mills by clearing only 25 per cent soft loans to pay off cane dues

Millers, as well as officials of the sugar commissionerate, said banks were wary of disbursing loans as most banks, including Maharashtra State Cooperative Bank (MSC) Bank, had demanded either state government guarantee or collateral from the mills for sanctioning loans.

Maharashtra banks stonewall mills by clearing only 25 per cent soft loans to pay off cane dues
Concerned over rising cane dues, the central government had announced a soft loan scheme of Rs 10,500 crore to help mills pay their farmers. File

Sugar mills in the state have blamed banking bottlenecks for the slow disbursal of soft loans to clear cane dues. As against the expected Rs 3,314-crore soft loan expected to be disbursed, banks have sanctioned Rs 838 crore of which Rs 299 crore has been passed on to mills to clear their dues.

Officials of the sugar commissionerate said their office cleared proposals for disbursal of loans worth Rs 3,314 crore. But to date, banks had sanctioned loans worth Rs 838 crore of which only Rs 299 crore had been disbursed in actuals. Around 160 mills were found eligible for the loan scheme in the state.

Millers, as well as officials of the sugar commissionerate, said banks were wary of disbursing loans as most banks, including Maharashtra State Cooperative Bank (MSC) Bank, had demanded either state government guarantee or collateral from the mills for sanctioning loans. “Banks have raised issues such as low sugar stock, NPA (non-performing assets) of mills, net worth of the mills as reasons for non-disbursal of the loan,” officials said.

While some banks have disbursed the loan, others have refrained from doing so. In a letter to National Bank for Agriculture and Rural Development (NABARD), Jaiprakash Dandegaonkar, chairman of Maharashtra State Cooperative Sugar Factories Federation, said this had resulted in an anomaly where some farmers had received the money while others in the same area had not due to banks refusing to clear loans.

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In his letter, Dandegoankar urged NABARD to relax conditions set by banks for releasing funds. “The outstanding cane dues as stated by the sugar commissioner stand at Rs 3,600 crore as of the first week of May. This amount can come down substantially if the relaxations are granted,” he said.

Concerned over rising cane dues, the central government had announced a soft loan scheme of Rs 10,500 crore to help mills pay their farmers. The scheme was to see mills availing loans at seven to 10 per cent interest for a year.

From day one, however, the scheme had failed to take off as banks had either exhausted their exposure limit for the sugar sector or mills were in a position to avail more credit as they had already finished their capacity to take loans.