IBA approves tea package

The Indian Bank Association (IBA) has approved a slew of measures for reviving the tea industry, as mentioned by finance minister, Jaswant Singh, in the interim budget.

The IBA has recommended relief measures for various segments of the tea industry""small tea growers, bought leaf factories and large tea growers and manufacturers.

C K Dhanuka, chairman Indian Tea Association (ITA) said that the package would give the industry some breathing space and would also help to achieve better productivity.

For the large tea growers and manufacturers, IBA has said that restructuring options for the borrowers would be considered on a case-to-case basis.

Irregular outstandings in term or working capital loan as on December 31, could be carved into a special tea term loan (STTL).

As part of the restructuring exercise, funding requirement for carrying out a VRS exercise or such other measures for improving productivity could also be considered depending on the viability of the proposal and suitable repayment fixed on the basis of cash flow projections.

The repayment of STTL may be allowed over a period of 5-7 years including moratorium of one year based on the cash flow projection. Interest on STTL may be charged at the benchmark rate of the bank.

Banks may examine feasibility of converting rupee loans including structured loans into foreign currency loans to pass on the benefit of lower interest rates to the borrowers.

In case where the asset cover is insufficient, banks may seek additional collateral security from the borrowers.

For the small tea growers, fresh working capital limit may be considered based on assessment of requirements.

Working capital limits upto Rs 2 lakh, interest may be charged at the benchmark rate of the bank. It may be mentioned small growers account for around 18 per cent of the total production in the industry.

For bought leaf factories, interest on STTL and fresh working capital may be considered at the benchmark rate of the bank.