Home > Banks try to forcibly recover loans from rice millers

Banks try to forcibly recover loans from rice millers

Industry says relief package allows it to delay repayments for a year. PHOTO: FILE

Industry says relief package allows it to delay repayments for a year. PHOTO: FILE

LAHORE: The difficult days of people associated with the agriculture industry, particularly rice growers, millers and exporters, seem to be not ending as many banks are heaping pressure on mill owners to return their debt, the payment of which was deferred for a year under the prime minister’s relief package.

“Nearly all banks have stepped up pressure on us; in fact few of them have deployed staff in our warehouses and are not allowing owners to enter the premises until the clearance of debt,” said Faisal Cheema, Chairman of the Rice Mills Association, while talking to The Express Tribune.

Under the Rs341-billion relief package, the repayment of outstanding loans of rice millers has been delayed until June 2016. Moreover, the millers have also been exempted from the minimum turnover tax for the tax year 2015 on the recommendation of a standing committee.

The decision was taken in a meeting arranged by the State Bank of Pakistan (SBP) on September 4 this year. The huddle was a follow-up to a meeting held in the Prime Minister’s Office on September 2 where issues faced by the entire agriculture sector were discussed.

Representatives of the SBP and other banks agreed in the meeting, where rice millers, growers and exporters were present, to facilitate the borrowers through loan rollovers and release the commodity pledged with them as its quality was deteriorating rapidly.

However, Cheema argued that only one bank was following the instructions whereas others were pressurising the mill owners to repay the borrowed money. “A fresh paddy crop has also arrived in the market, but no one is ready to purchase it because of the stock pile-up, estimated at more than 500,000 tons,” he said.

Outstanding loans of basmati rice millers stood at Rs21.65 billion for 2014-15, whereas the loans taken for processing non-basmati rice stood at Rs8.9 billion.

Responding to the criticism from opposition parties, the Election Commission of Pakistan later suspended application of three features of the relief package, but it did not touch the incentive given to the rice industry.

The weakening international commodity markets have pushed down prices of commodities in Pakistan as well and the fresh paddy crop is available at much cheaper rates than the prices prevailed a year ago.

“We were not at all impressed with the PM’s package; our per-acre loss has already exceeded Rs50,000,” claimed Haji Ramazan, Information Secretary of the Kissan Board Pakistan.

“We still demand announcement of support prices for paddy and cotton crops as the government did in the case of wheat; this may help stabilise paddy and cotton prices,” he said. “We know that the Rs5,000 per-acre subsidy given in the package is not enough and we also know how difficult it will be for poor farmers to get this facility.”

“Growers of every crop are enduring losses due to the international price pressure; in Punjab it is a real debacle as farmers are uncertain what to do with the next crop in the face of liquidity crunch in the market,” said Hamid Malhi, Director of Farmers Associate Pakistan.

“If we wait for the market to stabilise on its own, then it will turn into a nightmare for the farmers; the government should take action to save the rural economy,” Malhi added.

Published in The Express Tribune, October 15th, 2015.

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