The government has offered a soft loan package to the sugar industry to clear cane price arrears for the current and previous marketing season.
Under the package, loans equivalent to the notional central excise duty payable on total production of sugar during 2006-07 and 2007-08 sugar seasons would be granted.
Select public sector, regional rural and cooperative banks and the National Bank for Agricultural and Rural Development (Nabard), who are participating in the bailout package, would be provided full interest subvention. The tenure of the loan would be four years, including two years of moratorium. The loan would have to be repaid in 24 monthly instalments after a moratorium of 2 years.
The banks will charge 12 per cent rate of interest on these loans. The government will fully pay this interest directly to bank. The government will meet 5 per cent of the interest through the central budget, and the remaining 7 per cent from the Sugar Development Fund.
“The interest rate subsidy would be provided if this account is regular, that is the repayment of instalment of principal is made after the expiry of moratorium. In case the party is not able to make repayments as per the schedule approved in the beginning of the season, it would not be entitled for the interest subsidy till it regularises the account to the satisfaction of the bank,” the notification said.
Among the leading banks who would participate in the scheme are State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank and Indian Bank. Nabard shall be the nodal agency for cooperative banks and regional rural banks.