Government Issues Norms To Recast Sugar Mills' Loans, Gives 2 Year Moratorium

Government has issued guidelines for restructuring of loans taken by sugar mills and providing eligible defaulting factories with a two-year moratorium and repayment time of five years. The norms pertain to loans taken by millers from the sugar development fund (SDF).

The total outstanding default from the SDF is nearly Rs 3,100 crore, including principal and interest, according to an official statement issued on Wednesday by the department of food and public distribution.

The department has come out with the guildelines for "for restructuring of SDF Loans under Rule 26 of the SDF Rules 1983".

It said that the guidelines have provision for a "two-year moratorium and then five years of repayment".

These guidelines will be uniformly applicable for SDF loans availed by all types of concerns, including co-operative societies, private limited companies and public limited companies.

The rate of interest will be changed to the interest rate as per the prevailing bank rate on the date of approval of the rehabilitation package.

"These points will facilitate reduction of the debt burden over these defaulting sugar mills," the statement said.

A sugar factory that has been incurring cash losses continuously for the last three financial years or factory's net worth is negative, but the factory is not closed or has not ceased to crush cane for more than two sugar seasons, excluding the current sugar season is eligible to apply for restructuring, the statement said.