Food procurement for the central pool in Punjab has come under the shadow of Rs 20,000-crore unpaid dues by the Union government.
State Bank of India (SBI) chairman Arundhati Bhattacharya on Monday said that the Reserve Bank of India (RBI) had asked lenders, including SBI, to make provisions for foodgrain loans extended in Punjab. She, however, declined to elaborate on the exposure and the status of provisions.
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The government is in discussions with regulators as well as banks and other government agencies to ensure that the issue relating to food stocks in Punjab is resolved, Sinha told reporters on the sidelines of a banking summit by Indian Merchant Chamber.
Asked about RBI's letter to banks to make higher provisions, the minister said the issue raised by the RBI was correct from the standpoint of the regulator; banks' explanation was also correct; there was a need to find the right solution to the issue.
Centre to Punjab: File bills
The Union food ministry has asked the Punjab government to give pending bills of the past three years related to foodgrain procurement for re-imbursement so the state could repay loans to the banks.
The repayment of loan by the state government would enable it to avail fresh cash credit from banks for undertaking wheat procurement in the ongoing rabi season.
Some 30-odd banks, led by SBI, had extended loans of Rs 12,000 crore to the state for foodgrain procurement programme.
"We have cleared bills for foodgrain procurement based on the minimum support price (MSP). But other bills related to expenses like interest, transporation, and other incidental costs have not been given for the past three years. In some cases, inflated bills have been given," a senior food ministry official said.
The submitted bills are being cleared in line with the norms, the official said.
The issue of pending bills was raised earlier in 2014 and a joint committee was set up to look into the matter.
The state government was asked to give bills in six months but it did not take any action, the official shared.
Punjab Food and Civil Supplies Director Shivdular Singh Dhillon last week had said the state had availed huge cash credit loans from commercial banks to fund procurement activities.
However, non-reimbursement led to ballooning of the interest component, which is being compounded on a monthly basis, he had said.
The matter regarding the outstandings/receivables pertaining to the food credit account of the state is already under discussion with the Centre, Dhillon had said.
For procurement purposes, the state on the basis of procurement targets fixed by the Centre, has over the years been authorised a cash credit limit (CCL) up to Rs 20,000 crore by the RBI.
The Centre has set up a procurement target of 30 million tonnes for the 2016-17 marketing year starting this month. The wheat procurement has already started and the state has purchased about three million tonnes as on April 17.
Punjab and Haryana contribute in a big way to the central pool.
RATS IN THE GODOWN
- 30-odd banks led by the State Bank of India are now staring at heavy losses from the unfolding food scam in Punjab