Implement sugar package, Chidambaram tells banks

FM asks banks to submit a report by February 22.

Finance Minister P Chidambaram on Tuesday asked public sector banks to implement the interest-free loan package announced for sugar mills "in letter and spirit" and submit a report by February 22.

Punjab National Bank, Indian Overseas Bank and Indian Bank have implemented the package. "Others have been advised to complete the exercise soon. The final report will come by February 22," Chidambaram said after meeting public sector bank chiefs here.

In December, the government notified a package allowing sugar mills to avail of interest-free loans for clearing cane price arrears of 2006-07 and 2007-08 sugar seasons. Public sector banks were directed to provide loans equivalent to the notional central excise duty payable by sugar mills on total output of sugar during the two sugar seasons.

The government gives full 12 per cent interest subvention per annum to all scheduled commercial banks, regional rural banks and co-operative banks for the total duration of the loan.