Apex Coop fate hangs fire, bail-out for other banks sought

With Apex Bank no longer in a position to extend finance during the cane crushing season, Anandrao Adsul, Union minister of state for finance, has sought a bail-out for the factories by involving the RBI, National Bank for Agriculture and Rural Development (Nabard) and the Maharashtra State Co-operative (MSC) Bank.

The RBI had cancelled the Apex Bank's licence on October 30. Adsul suggested that the Apex Bank's loan portfolio pertaining to 14 sugar co-operative factories could be picked up by the MSC Bank after through due diligence.

A senior Apex Bank official said they had financed 12 sugar factories. An Apex Bank-led consortium of banks had an exposure of Rs 365 crore (which includes working capital and term loans) to these factories.

Of the Rs 365 crore, Apex Bank's share is Rs 115 crore. The minister today had a meeting with senior RBI, Nabard, MSC Bank and Apex Bank officials to resolve the crisis faced by the sugar factories.

MSC Bank has indicated its willingness to take over Apex Bank's sugar factory loan portfolio, provided the Reserve Bank of India and Nabard relaxed sectoral caps pertaining to sugar factory financing, said Gulabrao Shelke, chairman, MSC Bank.

Further, as per Nabard and RBI stipulations, MSC Bank can hope to finance factories from the Apex Bank stable only if they (factories) can get a state government guarantee.