 "Brewing flavours into your regular cuppa")
While the tea, in the auctions, is sold as per the garden's name, the payment is made in the name of the tea company. However, during the switchover of the settlement bank from State Bank of India to Bank of India, the IT department of NSE developed a technical snag which prevented the money from the buyers to be transferred to the sellers' account.
The Indian Tea Association (ITA), which majorly represents tea producers from West Bengal and Assam, said that prompt payments cannot be reconciled as Account Sales (auction sales) are being generated in the name of garden marks and not in the names of the selling companies. Thus payments from buyers are being kept in the Settlement Account of the bank and are not being remitted to sellers.
This resulted in the tea, sold in Sale number 37 of the pan-India auction, to get delivered to the buyers (namely exporters) from the sellers' warehouses while the seller is yet to receive any payment.
Normally, in an e-auction, the payment to the seller is made in a 13-day timeframe to get the leaf delivered; else it operates on a cash-and-carry model after the auction is concluded.
However, with the sellers (who buys tea from the gardens) not receiving the payment, they too are unable to pay to the tea producing companies as the entire system works on a credit model.
"Also there is confusion in the system. The Delivery Orders, which are negotiable instruments for delivery of tea are being issued with digital signatures without proper infrastructure for verification of their authenticity by the warehouses prior to delivery of teas to buyers. This has resulted in the warehouses feeling scared about the validity of the transaction," an industry official said.
While Buyers have downloaded the Delivery Orders and obtained delivery of the teas, corresponding remittances to Sellers for the value of their teas and to warehouses for storage of teas have not taken place as per earlier system as Account Sales can not be uploaded in individual company's name through the Settlement Bank.
"The brokers also get one per cent of the transaction as brokerage charges which has also been held up", the official said.
Besides the payment of Rs. 150 crore being held up in the Settlement Account of the bank, the ITA is also aggrieved as the industry wasn't consulted when the process of changing the settlement bank took place.
"Bank of India failed to grasp the requirements of the associated stake holders, namely sellers, buyers, auctioneers and warehouses operating in the auction system", an ITA official said adding that the industry is yet to receive any communication over the same from the settlement bank or NSEIT, the IT wing of NSE which handles the auction's technicalities.
ITA has approached the Tea Board of India citing their problems via a letter. However, it is yet to receive any response.
