Coffee Board proposes action plan to assist bankers recover dues from growers

The state-run Coffee Board proposes to formulate an action plan to assist bankers recover the overdues from growers in Karnataka, who of late have not shown interest in repaying their loans despite the commodity fetching higher prices.

The issue of non-performing assets (NPAs) and recovery in coffee loans figured, yet again, at the 130th meeting of the State Level Bankers Committee on Tuesday.

Seeking a list of defaulters from bankers, the Coffee Board Director of Finance, Aarti Dewan Gupta, said the board was planning to develop an action plan to assist bankers in initiating the recovery. She was responding to the concerns expressed by the bankers at the SLBC meet.

"It is a matter of concern that the NPAs in coffee advances are mounting and bankers are finding it difficult to recover the same," said T.K.Srivastava, Executive Director, Syndicate Bank, the lead banker in Karnataka.

Outstanding loans

According to bankers, the total outstanding coffee loans in the State is estimated around Rs 1,250 crore. Of this, the overdues, including the NPAs, are pegged at around Rs 850 crore and are rising.

Major bankers in the coffee growing regions of Karnataka, including Syndicate Bank, State Bank of Mysore, Canara Bank, State Bank of Mysore and Corporation Bank, have exposure to coffee loans. The bank wise break-up was not available.

Bankers said that the loans sanctioned and disbursed prior to 2002 are still outstanding, even after repeated restructuring in the line of package advised by the Coffee Board. Also, the Kisan Credit Card loans disbursed after 2002 are not renewed by planters for several years.

Further, the term loan installments are not paid, even as per the restructured payment schedule, while some planters are even reluctant to sign letter of revival, they said.

In 2010, the Centre had announced a Rs 363-crore debt relief package for the coffee sector, that benefited largely the small growers. Coffee prices are on an upswing in the recent past on concerns over supplies from Brazil, the largest producer.

The board in its latest post monsoon estimates has pegged the 2014-15 crop size at 3.31 lakh tonnes, a four per cent decline over its early or post blossom estimate of 3.44 lakh tonnes, primarily due to lower arabica crop that faced a severe pest attack, erratic rainfall and a cyclone.

However, the latest estimates for 2014-15 are 8.7 per cent higher than last year's final estimate of 3.04 lakh tonnes. Arabica output for the current season is pegged at 99,600 tonnes, while the production of robusta is expected to be 2.31 lakh tonnes for the 2014-15 season, a decline of 5.6 per cent and 3.28 per cent, respectively over the post blossom estimate.