Facing liquidity crunch, the Food Corporation of India (FCI) has raised short-term loans of Rs 20,000 crore from around 20 banks to meet funding requirements for the procurement and distribution of foodgrains.
State-run FCI had floated a tender on April 24, inviting bids for short-term loans. The tender closed on April 30.
According to sources, the FCI has raised Rs 20,000-crore short-term loans to meet its working capital requirements.
The loans were raised from around 20 banks at interest rates in the range of 10.19-10.25%, they added.
"To meet its short-term fund requirement for the procurement and distribution of foodgrains, the corporation is considering raising short-term loans from the scheduled banks only for 90 days' tenure on unsecured basis," the FCI had said in the tender.
At present, wheat procurement is being undertaken in full swing, particularly from Punjab and Haryana.
The FCI, the nodal agency for the procurement and distribution of foodgrains, is facing a huge liquidity crunch due to a delay in the payment of food subsidy by the Centre.
It had food subsidy dues of around Rs 50,000 crore at the end of the 2013-14 fiscal.
In the first week of April, the corporation had written to the union food ministry, informing about its financial crunch, sources said.
The government provided Rs 75,500.02 crore as subsidy to the FCI for the last fiscal, while the actual subsidy stood at Rs 1,03,791.85 crore. The total subsidy arrears, including those carried over from the previous years, have mounted to about Rs 50,000 crore.
Apart from short-term loans, the FCI has a cash credit limit of Rs 54,495 crore, which it can avail from the consortium of 62 banks against foodgrains stocks lying in its godowns.
During the last fiscal, the FCI had raised Rs 8,000 crore from the market via long-term bonds.
The FCI's arrears have risen sharply in the past few years due to increase in the minimum support prices (MSP) for wheat and rice as well as high procurement, storage and distribution costs.
The costs of MSP, procurement storage and distribution for wheat and rice were Rs 1,494.35 per quintal and Rs 1,983.11 per quintal, respectively, in 2010-11.
They have gone up to Rs 1,932.39 per quintal and Rs 2,638.54 per quintal, respectively, in 2013-14.