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NABARD
to provide Rs500 crore assistance to sugar industry
Our Banking
Bureau
14 September 2005
 Chennai:
The food ministry has worked out a package for restructuring
commercially viable sugar factories that have term loans
outstanding as on March 31, 2005
According
to the package, NABARD will provide Rs500 crore as liquidity
support to cooperative banks. For availing loans, sugar
mills in the country have been categorised into those
which are required to repay the term loan with in a period
of five years and those which could repay within a period
of 15 years.
There
are 47 sugar factories under the first category and 92
under the second. A moratorium of two years will be allowed
in both the cases said Sharad Pawar, minister of agriculture,
consumer affairs, food and public distribution. The package
will benefit about 270 cooperative sugar factories and
the total term loans thus restructured amounted to Rs2,500
crore.
According
to the package proposed by NABARD, the rate of interest
in the restructured loans will be brought down to 10 per
cent per annum with effect from April 1, 2005, irrespective
of the original contractual rate. The amount to be provided
by the centre for interest subvention of the restructuring
of loans is estimated at Rs525 crore. NABARD has already
initiated the process of making available to sugar factories
the benefit of the package by October 15, 2005.
 There
are 553 sugar factories in 18 states out of which 55 per
cent are in cooperative sector. NABARD has analysed the
condition of 170 factories for preparing the package.
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