UP cooperative banks' sugar sector exposure stands at Rs 5,700 crore

Total advances included soft loans under Central, state schemes

Cooperative banks in Uttar Pradesh had an exposure of Rs 5,747 crore to the sugar sector during the 2018-19 crushing season.

The amount includes about Rs 4,492-crore worth of regular loans to sugar mills and Rs 1,255 crore in soft loans provided under the different central and state government schemes.

According to UP cooperative minister Mukut Bihari Verma, the cooperative banks had actively contributed towards the payment of cane farmers’ arrears by providing loans to mills.

The cooperative banks have been facing rough times and there is even a proposal to merge all these lenders into a single banking entity for greater commercial viability and sustainability.

Last year, Adityanath government had floated a soft loan scheme for mills having a payment ratio of over 30 per cent during the 2017-18 crushing cycle. Subsequently, eligible mills were sanctioned soft loans worth over Rs 2,900 crore.

Besides, the Centre also rolled out a pan-India soft loan scheme for mills whcih had settled 25 per cent of farmers’ dues of 2018-19 season by March 2019. It was announced in the run up to the 2019 Lok Sabha elections to improve the payments ratio.

Mills owe about Rs 9,000 crore to sugarcane farmers in the state.

Recently, the state government had warned mills that FIRs would be lodged against them if they failed to clear dues. The govt also said it would issue recovery certificates authorising district administration to seize the mills.

Last month, the CM had also warned mills to settle the full outstanding by August 2019. The state has also requested the Centre to allow sugar exports to help mills generate cash.

During Lok Sabha elections, opposition parties had used the issue to attack the ruling BJP. Facilitating prompt cane payments was one of the major pre-poll promises of the BJP in the run up to the 2017 UP elections as well.

In the recently concluded 2018-19 crushing season, 119 sugar mills in UP, including 94 private, 24 cooperative and a UP State Sugar Corporation unit, had clocked total sugar production of 11.8 million tonnes (MT), slightly lower that the last year's output of 12 MT.  

Meanwhile, UP cooperative banks reported 20 per cent growth in short term kharif loans during the first quarter (Apr-June) of the current financial year at Rs 3,848 crore.