Goa CM asks banks to go easy on mining industry borrowers till June

The Goa Chief Minister Manohar Parrikar has once again requested bankers not to adopt harsh measures against mining-related loan defaulters till June.

At a special State-level Bankers’ Committee (SLBC) meeting held here on Wednesday, both the bankers and the Goa Government remained non-committal on any specific relief to mining-dependent borrowers of banks with high non-performing assets.

The Chief Minister asked the banks to work out various options and submit the same to the State Government. He indicated that some bailout package could be in the offing for urban cooperative banks which were worst hit by over-exposure to mining-sector loans, which include those of barges, trucks and mining machinery.

This was the second special SLBC meeting convened by the State Bank of India, the lead bank, within a year to explore relief measures for barge-owners, truck-owners and mining machinery owners who are saddled with sticky advances due to a mining ban which continues well over 17 months.

Wednesday’s meeting, which was convened following the intervention of the Union Finance Minister to see if some relief could be given to these mining-dependent defaulters, was attended by Mihir Kumar, Secretary, In-charge of Banking, Ministry of Finance, top officials of Goa, Reserve Bank of India, SBI apart from senior-level representatives of 20 banks, including six local urban cooperative banks which expressed deep concern over “quality of assets fast depreciating”.

Bankers, particularly the cooperative banks, sought relief in terms of waiver of interest and partial waiver of principal as in their case, the NPA position had crossed over 60 per cent. It is around 40 per cent for overall mining related advances which today stand at ₹1,795 crore.

Parrikar later told presspersons that the scenario may change soon as he was confident of his party government coming to power at the Centre giving him more say in seeking Central relief.

Bankers in Goa are accused of having disproportionately high exposure to the mining sector when Goa witnessed an iron ore export boom led by China, with annual exports at one stage touching 54 million tonnes. The State cooperative sector banks are the worst affected.

The ban on mining has adversely affected State government’s treasury, revenues of Central Excise and Service Tax, south Goa-based major port of Mormugao and the economic activity in nearly seven mining taluks of the State.

Apart from direct mining exposure, other consumer and housing loans in the mining belt have also become sticky due to job-loss and loss of mining related small and medium businesses.

As on date, of the nearly 214 barge loans (covering around 150 barges) the total dues are ₹332 crore of which ₹228 crore have become NPAs. In case of truck loans, of the 4,745 accounts (with over 6,500 trucks) of the total outstanding dues of ₹354.29 crore, ₹135.77 crore have turned NPAs. Much critical is the position of advances of others including mining machinery, other mining related machinery and equipment, small shops and hotels and ancillary businesses in mining areas and port area. Several small enterprises have closed down and their owners are grappling for alternative source of livelihood.

Ahead of Wednesday’s SLBC, the President of Goa Barge Owners’ Association Atul Jadhav told Business Line that they have sought a waiver of the accumulated barge interest of around ₹70 crore and to bring down the outstanding barge advances to the level of scrap value of the barges.

Bankers reiterated their demand for a guarantee cover to the mining sector loans by the State Government as assets were fast deteriorating. Apart from a recent Supreme Court directive to the State to conduct e-auction of already extracted ore lying at different sights, the original ban order continues.