Alathur: The delay in renewing the agreement between the State Bank of India (SBI) and Supplyco for the procurement and distribution of paddy is reportedly not due to any dispute over the interest rate but rather due to the financial crisis faced by Supplyco.
SBI's regional office clarified that the new agreement had been sent to Supplyco well before the previous one expired on May 31. No new conditions, including changes in the interest rate, have been proposed by the bank, and there is no disagreement in that regard.
However, when Supplyco renewed its agreement with Canara Bank, the interest rate was raised to 9%. According to the mutual understanding between the consortium of banks and Supplyco, all banks involved in the arrangement must be paid the highest interest rate agreed upon with any one bank. Thus, when Supplyco signs the renewed agreement with SBI, the interest rate will increase to 9%.
Once the agreement is signed, the Paddy Receipt Sheet (PRS) loan distribution must resume the very next day. During the harvest season, Supplyco is expected to pay ₹450 crore to SBI, even if this amount is paid in two instalments. As of now, Supplyco is unable to pay even ₹200 crore, and the State Finance Department has not approved any funds.
Due to an outstanding repayment liability of ₹2,500 crore under the consortium loan, SBI will resume disbursing funds to farmers only if Supplyco pays a portion of the ₹450 crore upfront. Meanwhile, SBI suspended disbursing funds on May 31, while Canara Bank, which also halted PRS loan distribution on March 31, resumed the process only on May 20. Out of the ₹1,590 crore worth of paddy procured during the second harvest, ₹843 crore remains to be paid.
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