Maharashtra’s private sugar mills approached the Center saying that the price difference between the banks ‘valuation of sugar stocks and the international realization, which is the low margin in the sugar mills’ pledge accounts, is became a major obstacle to the release of sugar by banks.
In a representation to the Union Minister in charge of road transport, highways and maritime transport and water resources, Nitin Gadkari, the association requested that, as recommended by Nabard during its recent meeting on sugar, the government places the incentive grants on non-linked NPA accounts with nationalized banks. and the amount should be paid into farmers’ accounts for the payment of cane rights.
BB Thombare, President of the Western India Sugar Mills Association (WISMA) pointed out that for the 2018-19 sugar season, the government has allocated a minimum indicative export quota (MIEQ) of sugar at 50 lakh tonnes across India. with Maharashtra at 15.58 lakh tonnes.
“The period from November to March is favorable for sugar exports and during this period, sugar from Brazil, Australia and Thailand will not compete with India,” he said.
Nabard also mentioned the Centre’s decision to keep a buffer stock of 30 lakh tonnes for the current year, he said. During this time, the cost provided by the Center will only cover interest, storage and insurance costs, and therefore the policy of financing sugar by banks for the current year should include valuation. and funding relative to buffer stock and raw sugar production, he said.
Thombare said banks should consider extending funding up to 100% instead of the current 85% against buffer stocks.
According to him, given the creditworthiness and track record of the sugar industry, Nabard recommended that non-NPA loans be considered for restructuring. “The RBI should look into this to make loan restructuring variable for the banking industry,” he said.