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.
