NABARD to provide Rs500 crore assistance to sugar industry

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.