GOVERNMENT ANNOUNCES RELIEF PACKAGE FOR COFFEE SECTOR
Date : 06 May 2002
Location : New Delhi
Deeply concerned with the unprecedented crisis being faced by the coffee sector due to all time low prices, the Government of India have taken a number of steps to safeguard the interests of the coffee growers particularly the small grower sector, during the last two years. Besides implementing a number of developmental schemes through the Coffee Board which provide financial and technical assistance to the coffee growers, Government of India has also implemented a scheme providing for interest relief @ 5% to the small coffee growers on loans availed by them from financial institutions. Furthermore the Ministry of Commerce & Industry has taken up with the commercial banks for rescheduling the loans of coffee growers and extend fresh crop loans to this sector.
As the coffee prices have not looked up and the downward trend continues, the Government of India and Reserve Bank of India (RBI) after detailed discussions and consultations have announced a new relief package for the coffee sector.
As part of the new package, all types of coffee loans (short, medium and long term including re-phased/rescheduled loans) which are outstanding as on 30th June, 2002 and not classified as NPAs (Non-Performing Assets), will be consolidated into a single term loan viz. Special Coffee Term Loans (SCTL) 2002. The repayment schedule of the SCTL will range between 7-9 years including an initial repayment holiday (moratorium) of two years, subject to review thereafter. The growers who have availed crop loans in 2001-02 shall pay back a minimum 75% of crop loans to be eligible for availing fresh crop loans in 2002-03 and the balance 25% will be included for re-schedulement in the special coffee term loans package.
The banks have also agreed to consider charging 1% less than the applicable rate of interest during the moratorium period for the special coffee term loans subject to interest not less than PLR. Further, the SLBC and the NABARD have agreed that, after rescheduling all the existing loans, fresh crop loans are to be considered to the coffee growers as per revised scale of finance to be fixed taking into account the cost of cultivation more realistically.
This package has been generally welcomed by the coffee industry and is expected to provide substantive relief to coffee growers who are facing hardships due to prevailing low coffee prices.
In the wake of this package announced by RBI, Ministry has advised Coffee Board to immediately constitute field teams which should go to different coffee growing areas, interact with the traditionally well-disciplined growers and educate them to adhere to the discipline of the system under which they borrow from the banks and derive maximum advantage out of the current relief package announced by RBI.
Ministry of Commerce & Industry (Department of Commerce – Plantation Division), New Delhi, dated 6th May, 2002