Home India Ministry of Consumer Affairs, Food and Public Distribution The Central Government with a view to increase production of...
Date: 2019-01-04 Category: Extra Ordinary State: Union Government Country: India

The Central Government with a view to increase production of ethanol and its supply under Ethanol Blended with Petrol

Issued by Ministry of Consumer Affairs, Food and Public Distribution · Department of Food and Public Distribution

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Executive Summary & Key Takeaways

Executive Summary: This notification, dated January 4, 2019, amends a previous scheme to increase ethanol production and supply under the Ethanol Blended with Petrol (EBP) Programme. It modifies interest subvention terms, the loan approval process, and repayment guidelines for sugar mills. The aim is to improve the liquidity of sugar mills, enabling them to clear cane price arrears for farmers. Key Points / Main Content: Interest Subvention: * Interest subvention will be 6% per annum or 50% of the interest rate charged by banks/NCDC/IREDA, whichever is lower, for five years. Loan Approval Process: * DFPD will grant in-principle approval to applications and recommend them to lending banks. * Banks/NCDC/IREDA have the liberty to sanction/release loans based on their commercial norms, policies, and regulatory guidelines. Operational Instructions: * DFS will issue instructions to banks/NCDC/IREDA to operationalize the scheme, including appointing NABARD as a nodal bank. Repayment Guidelines: * Banks/NCDC/IREDA may decide on accelerated payments in case of surplus cash flow with sugar mills. * The interest subvention liability of DFPD will be reduced accordingly. Impact Analysis: Sugar Mills: * Impact: Enhanced financial assistance and modified loan terms to improve liquidity and ethanol production capacity. * Action Required: Prepare and submit applications for financial assistance under the revised scheme. Banks/NCDC/IREDA: * Impact: Revised guidelines for loan sanctioning and release, as well as for handling accelerated payments. * Action Required: Operationalize the scheme based on DFS instructions, including appointing NABARD as a nodal bank. Department of Food and Public Distribution (DFPD): * Impact: Responsible for providing in-principle approval to applications and recommending them to lending banks. * Action Required: Scrutinize applications and provide recommendations to lending banks. Department of Financial Services (DFS): * Impact: Responsible for issuing instructions to banks/NCDC/IREDA to operationalize the scheme. * Action Required: Issue suitable instructions to banks/NCDC/IREDA, including the appointment of NABARD as a nodal bank. Farmers: * Impact: Indirectly benefits from the improved liquidity of sugar mills, enabling them to clear cane price arrears. * Action Required: No direct action required.

Key Entities Referenced

Ethanol Blended with Petrol EBP Programme: A government program aimed at increasing the production and supply of ethanol by blending it with petrol. Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity: A government scheme providing financial support to sugar mills to increase their ethanol production capacity. Ministry of Consumer Affairs, Food and Public Distribution: The government ministry responsible for consumer affairs, food, and public distribution. Department of Food and Public Distribution: A department within the Ministry of Consumer Affairs, Food and Public Distribution. National Cooperative Development Corporation NCDC: A financial institution providing loans mentioned in the context of interest subvention for sugar mills. Indian Renewable Energy Development Agency Limited IREDA: A financial institution providing loans, mentioned in the context of interest subvention for sugar mills Reserve Bank of India RBI: The central bank of India, responsible for regulatory guidelines, including restructuring guidelines, relevant to loan sanctioning. National Bank for Agriculture and Rural Development NABARD: A nodal bank appointed to operationalize the scheme.
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Now in pursuance of para 9 of the said notification dated 19.07.2018, Central Government has decided that Para 3(i) of the notification may be read as under:- “Interest subvention @ 6% per annum or 50% of rate of interest charged by banks/National Cooperative Development Corporation (NCDC)/ Indian Renewable Energy Development Agency Limited (IREDA), whichever is lower, on the loans to be extended by banks/NCDC/IREDA, shall be borne by the Central Government for five years” Para 5(i) of the notification may be read as under:- “After scrutinizing the applications cum proposals, DFPD will accord it’s in principle approval and recommend such approved proposals to the lending banks for considering sanction of loan. Banks/NCDC/IREDA would be at liberty to sanction/release the loan as per their commercial norms/policies and in compliance with regulatory guidelines, including the restructuring guidelines, as notified by RBI from time to time.” Para 5(v) of the notification may be read as under:- “The Department of Financial Services (DFS) will issue suitable instructions to the banks/NCDC/IREDA to operationalize the scheme including appointment of NABARD as a nodal bank”. Para 6(iii) of the notification may be read as under:- “In the event of surplus cash flow with the sugar mills, accelerated payments may be decided by the bank/NCDC/IREDA and the interest subvention liability of DFPD towards loan account would accordingly get reduced.” [F. No. 1(10)/2018-SP-I] SURESH KUMAR VASHISHTH, Jt. Secy. Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054.

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