IBA working on seafood sector bailout

Soon after drawing up a restructuring package for the ailing tea industry, the Indian Banks' Association (IBA) is now working out a rescue package for the debt-ridden seafood export industry.

The rehabilitation package envisages to increase the productivity of the sector manifold.

"The sector has the potential to export goods worth $ 5 billion every year. Its current value of exports is only $ 1.2 billion. We are talking to the seafood exporters association and working out a package for them," said H N Sinor, chief executive, IBA.

The package will ask banks to restructure the seafood sector debt and settle old dues. The sector has outstanding loans of over Rs 800 crore and an alarmingly high rate of non-performing assets at 30 per cent.

Lenders have filed numerous recovery suits at the debt recovery tribunals against 132 seafood processing units in the country to recover dues worth Rs 230 crore.

"We want a one time settlement with the banks with waiver of the interest component. This will help the borrowers settle and exit the business," said Sando Joseph, general secretary of the Kochi-based, Seafood Exporters' Association.

IBA has constituted a small group of general managers of banks ""State Bank of India, Federal Bank, State Bank of Travancore, Bank of India and Bank of Baroda"" that are active in financing seafood exports to work out the details of the package.

The seafood exports sector has been going through tough times for years now with the closure of several aquaculture farms following a Supreme Court ruling banning aquaculture farms near the sea coast.

Competitive pressures and bans by the US and European Union authorities for non-compliance with environmental and safety standards also hounded the sector.

IBA recently came out with a rejuvenation package for the tea sector. The package which envisages fresh funding and lower rate of interest on the existing loans suggests the creation of a centralised fund. The package is yet to be implemented with discussions on between Nabard and the tea industry association.

On the platter

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• The IBA's rehabilitation package of envisages to increase the productivity of the seafoods sector manifold.
• As part of the package, banks will be asked to restructure the sector's debt and settle old dues.
• The sector has outstanding loans of over Rs 800 crore and an alarmingly high rate of non-performing assets at 30 per cent.