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Maharashtra To Guarantee Co-Op Sugar Mill Loans

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Renni Abraham BUSINESS STANDARD
Last Updated : Jan 28 2013 | 1:12 AM IST

The Maharashtra state government last week decided to back the pre-seasonal loans to the tune of Rs 1000 crore availed of from the Maharashtra State Co-operative Bank (MSCB) and other district central co-operative banks by co-operative sugar factories in Maharashtra with a state government guarantee.

The decision comes in the wake of refusal by Reserve Bank of India (RBI) to allow the MSCB to further increase its exposure to co-operative sugar factories above the permitted 40 per cent level stipulated by the apex bank.

The state government had been told by RBI and Nabard at meetings held in July that it could pursue with district central co-operative banks and other financial institutions (including in the private sector) for financing co-operative sugar factories provided it was willing to offer a state government guarantee for these loans.

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Co-operative department officials said the state government decided to offer its backing to around Rs 45 crore in pre-seasonal loans required by 22 factories that are seeking finance from district central co-operative banks.

Notwithstanding the RBI fiat, MSCB has cleared pre-seasonal loans to 55 out of 60 factories. Of the 160, around 25 were non-operational in the last fiscal. In the current fiscal, another 22 co-operative sugar factories have reported negative net asset value.

The state government has asked the Union government to take a special view of problems of Maharashtra co-operative sugar factories considering the impact their failure would have on co-operative movement in the state. The state is also worried about the drop in per quintal rates of sugar to Rs 1140 per quintal, Rs 200 below expectations. This adversely impacted the fiscals of these co-operative sugar factories.

Faced with the RBI

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First Published: Oct 01 2002 | 12:00 AM IST

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