Govt defers ₹1,024-crore margin money loan to 9 sugar factories
Maharashtra state govt has deferred a proposal to extend a margin money loan of INR1,024 crore ($138m) to nine sugar factories controlled by BJP leaders. The NCDC loan would have come at a 9.72% interest rate and would have been the responsibility of the state govt to repay. Following the objection of a few ministers, the govt decided to lay down stricter norms and the loan policy has been made stricter. The factories failing to repay the capital and margin money loan will not be eligible for fresh loans and the factories run by private entities will not be eligible for the loan.
Mumbai: In the backdrop of strong resistance from the administration and poor recovery rate from the sugar factories controlled by politicians, the state government has deferred its proposal of extending margin money loan of ₹1,024 crore to nine sugar factories controlled by nine BJP leaders.
Eleven sugar factories controlled by leaders from various parties have previously defaulted on ₹525 crore towards the margin money loan and the accumulated interest.
The state cabinet deferred the proposal of margin money loan to the factories controlled by key BJP leaders, including Radhakrishna Vikhe Patil, Pankaja Munde, Harshvardhan Patil, Vijaysinh Mohite Patil and Raosaheb Danve, after it was opposed by a few ministers two weeks ago. The proposal again came up for approval on Wednesday but faced resistance and adverse remarks from the bureaucracy.
The margin money loan is provided by the central government’s National Cooperative Development Corporation (NCDC) at 9.72% interest rate with the responsibility of the state government to repay it. When the proposal came for approval, the cooperation and finance departments raised red flags, saying the move could jeopardise the fiscal health of the state. The departments have also pointed at the higher interest rate and said that most of the sugar factories did not complete the eligibility criteria.
The NCDC loan is nothing less than a guarantee as the state government will have to make budgetary allocation for the repayment even before the recovery from the factories. Except for three, other factories have exhausted their capacity to raise the loans, while one of them is in a very bad financial condition. This means the chances of recovery of the loan are very poor, the departments had stated.
{{/usCountry}}The NCDC loan is nothing less than a guarantee as the state government will have to make budgetary allocation for the repayment even before the recovery from the factories. Except for three, other factories have exhausted their capacity to raise the loans, while one of them is in a very bad financial condition. This means the chances of recovery of the loan are very poor, the departments had stated.
{{/usCountry}}Following this, chief minister Eknath Shinde and deputy chief minister Devendra Fadnavis on Wednesday decided to lay down stricter norms. The government has now appointed a cabinet sub-committee comprising senior ministers and also chalked out a stricter loan policy.
{{/usCountry}}Following this, chief minister Eknath Shinde and deputy chief minister Devendra Fadnavis on Wednesday decided to lay down stricter norms. The government has now appointed a cabinet sub-committee comprising senior ministers and also chalked out a stricter loan policy.
{{/usCountry}}Now, the factories failing to repay the capital and margin money loan will not be eligible for fresh loans and the factories run by private entities will not be eligible for the loan. The factories will be considered if their ratio of loan as per fixed asset coverage ratio was within limits. The state government has also decided to hold the entire board of directors responsible if the factories default on the loans. The state government will appoint an administrator within a month of failure to repay the loan by dissolving the board.
{{/usCountry}}Now, the factories failing to repay the capital and margin money loan will not be eligible for fresh loans and the factories run by private entities will not be eligible for the loan. The factories will be considered if their ratio of loan as per fixed asset coverage ratio was within limits. The state government has also decided to hold the entire board of directors responsible if the factories default on the loans. The state government will appoint an administrator within a month of failure to repay the loan by dissolving the board.
{{/usCountry}}
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