Bankers face uphill task in recovering loans from coffee growers

Coffee planters from Karnataka owe an estimated Rs 1,200 cr dues to bankers and many have defaulted

Recovery of term loans from coffee growers continues to be a major worry for bankers in Karnataka. Even after rescheduling the loans on many occasions over the last decade, planters are yet to repay their outstanding loans, amounting for over Rs 800 crore, a top banker said.

“Coffee planters are not willing to repay their loans even though coffee prices are very high,” said T K Srivastava, executive director, Syndicate Bank, the lead banker in Karnataka.

The issue of coffee loan overdues was debated at the State Level Bankers’ Committee (SLBC) meeting held today. The convenor of SLBC sought the assistance of Coffee Board to recover dues and NPAs from planters.

A Coffee Board representative, who was present at the meeting, requested banks to provide a list of coffee planters that have defaulted.

Recently, the government of Karnataka had addressed a letter to the Chairman of Coffee Board and advising to provide necessary assistance to bankers for recovery of the loans by driving an action plan in this regard.

SLBC data reveals that loans sanctioned and disbursed prior to 2002 are still outstanding, even after repeated restructuring in the line of package of advised by the Coffee Board.

“Term loan installments are not paid, even as per restructured repayment schedule. Some planters are reluctant to sign Letter of Revival,” Srivastava said.

The SLBC deliberated the issue in detail and expressed serious concern over the mounting overdues / NPAs which has a direct bearing on recycling of funds. According to banks, coffee growers from Karnataka owe around Rs 1,200 crore including NPAs worth Rs 850 crore. Some of the banks that have exposure to coffee plantations include Syndicate Bank, Canara Bank, Corporation Bank and State Bank of Mysore among others.

In 2010, the Central government had announced a Rs 363-crore debt relief package for the coffee plantation sector in order to help small growers, which account for over 70 per cent of the plantation holdings in the state. During the last year, coffee prices have gone up substantially due to concerns of lower crop in Brazil, the world’s largest producer of coffee.

The Coffee Board has projected a production of 331,000 tonnes of beans for 2014-15 crop season as against 304,500 tonnes produced in the previous year, an increase of 8.7 per cent year on year. Of this, Arabica accounts for 99,600 tonnes, while Robusta would be 231,400 tonnes.
NOT A SWEET CUP

• Planters yet to repay their outstanding loans amounting more than Rs 800 crore
• According to banks, coffee growers from Karnataka owe around Rs 1,200 cr including NPAs
• Some of the banks that have exposure to coffee plantations include Syndicate Bank, Canara Bank, Corporation Bank and State Bank of Mysore
• In 2010, the Centre had announced a Rs 363-crore debt relief package for the coffee plantation sector