Following a directive of the Tea Board earlier this year to introduce ‘settlement banking’ in tea auction, the Guwahati Tea Auction Centre (GTAC) has appointed IndusInd Bank as the settlement banker.
A top GTAC official informed that three banks were shortlisted and IndusInd Bank was finally selected for the job. He added that the system would be introduced sometimes next month.
Under the settlement banking system, the chosen bank acts as a broker. Tea buyers at the auction pay the bank against purchases and the bank, in turn, pays it to the seller. At present, buyers make payments to the broker and the broker pays to the seller within 14 days.
The decision to introduce settlement banking was taken after the tea broking firm, Carrit Moran, failed to clear a percentage of payment to the seller at the Kolkata auction centre in January as it faced financial crunch.
The industry has welcomed the decision. “Settlement banking is in the interest of both buyers and sellers,” said Dipanjol Deka, secretary, Tea Association of India.
