Executive Summary:
This notification, dated October 11, 2018, outlines amendments to the Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity, initially notified on July 19, 2018, and subsequently amended on August 9, 2018. The changes pertain to interest subvention, loan approval process, operationalization of the scheme, and accelerated payments by sugar mills.
Key Points / Main Content:
Interest Subvention:
* Interest subvention will be 6% per annum or 50% of the interest rate charged by banks/NCDC, whichever is lower, for five years on loans extended by banks/NCDC.
Loan Approval Process:
* DFPD will provide in-principle approval and recommend proposals to lending banks/NCDC.
* Banks/NCDC will sanction/release loans based on their commercial norms/policies, regulatory guidelines, and RBI restructuring guidelines.
Scheme Operationalization:
* DFS will instruct banks/NCDC to operationalize the scheme, including appointing NABARD as a nodal bank.
Accelerated Payments:
* Banks/NCDC may decide on accelerated payments by sugar mills with surplus cash flow.
* DFPD's interest subvention liability will be reduced accordingly.
Impact Analysis:
Central Government:
* Impact: Bears the interest subvention for loans to sugar mills.
* Action Required: Implement the changes in interest subvention as per the notification.
Sugar Mills:
* Impact: Benefit from financial assistance for enhancing ethanol production capacity; may be subject to accelerated payment decisions.
* Action Required: Utilize financial assistance for ethanol production; comply with accelerated payment decisions by banks/NCDC if surplus cash flow is available.
Banks/National Cooperative Development Corporation (NCDC):
* Impact: Sanction and release loans based on commercial norms, implement restructuring guidelines, and potentially decide on accelerated payments.
* Action Required: Sanction loans based on DFPD recommendations and commercial norms; implement restructuring guidelines and make decisions on accelerated payments.
Department of Food and Public Distribution (DFPD):
* Impact: Responsible for providing in-principle approval and recommending proposals.
* Action Required: Scrutinize applications and provide in-principle approval to eligible proposals.
Department of Financial Services (DFS):
* Impact: Responsible for instructing banks/NCDC to operationalize the scheme.
* Action Required: Issue instructions to banks/NCDC for operationalizing the scheme, including the appointment of NABARD as a nodal bank.
Farmers:
* Impact: Indirectly benefit through 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 program to increase the production and supply of ethanol, especially in surplus seasons, to improve the liquidity of sugar mills and enable them to clear cane price arrears of farmers.
Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity: A scheme notified to provide financial assistance 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: The department within the Ministry of Consumer Affairs, Food and Public Distribution that deals with food and public distribution matters.
National Cooperative Development Corporation NCDC: A financial institution that provides loans to sugar mills.
Reserve Bank of India RBI: The central bank of India, responsible for regulating the banking sector.
Department of Financial Services DFS: The department responsible for issuing instructions to banks and NCDC to operationalize the scheme.
NABARD: Designated as a nodal bank.
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5985 GI/2018 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
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[फा. सं. 1(10)/2018-एसपी-1]
सुरेश कुमार विशb, संयुM सिचव
MINISTRY OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION
(Department of Food and Public Distribution)
NOTIFICATION
New Delhi, the 11th October, 2018
S.O. 5219(E).—Whereas the Central Government, with a view to increase production of ethanol and
its supply under Ethanol Blended with Petrol (EBP) Programme, especially in the surplus seasons and thereby
to improve the liquidity position of the sugar mills enabling them to clear cane price arrears of the farmers,
has notified the scheme namely “Scheme for extending financial assistance to sugar mills for enhancement
and augmentation of ethanol production capacity” vide notification No. S.O. 3523(E), dated 19.07.2018,
which was subsequently amended vide notification No. S.O. 3952(E), dated 09.08.2018.
2. Now in pursuance of para 9 of the said notification dated 19.07.2018, Central Government makes
following changes in the said notification:—
(a) Para 3(i) would be substituted by the following:—
“Interest subvention @ 6% per annum or 50% of rate of interest charged by banks/National Cooperative
Development Corporation (NCDC), whichever is lower, on the loans to be extended by banks/NCDC,
shall be borne by the Central Government for five years”
(b) Para 5(i) would be substituted by the following:—
“After scrutinizing the applications cum proposals, DFPD will accord it’s in principle approval and
recommend such approved proposals to the lending banks/NCDC for considering sanction of loan.
Banks / NCDC 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.”
(c) Para 5(v) would be substituted by the following:—
“The Department of Financial Services (DFS) will issue suitable instructions to the banks/NCDC to
operationalize the scheme including appointment of NABARD as a nodal bank”.
(d) Para 6(iii) would be substituted by the following:—
“In the event of surplus cash flow with the sugar mills, accelerated payments may be decided by the
banks/NCDC 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.