The stalemate over the apportionment of food credit advances availed from the State Bank of India by civil supplies corporations of Telangana and Andhra Pradesh have resulted in the SBI asking the Telangana government to liquidate its outstanding with immediate effect.
The SBI, which hosts the food credit accounts of the two States, has said these accounts are subject to the NPA (non-performing assets) norms of the RBI and liable to be classified as NPA if they remained irregular or overdue for more than 90 days. “While the interest in respect of these accounts is being serviced, it is observed that the position of stocks and outstanding is running almost static for the past few years. The position revealed is not satisfactory as the account is overdue for liquidation now,” the SBI said in a letter addressed to Telangana government.
The Andhra Pradesh government had informed the bank that the apportioned amount due from it has been liquidated. “As the outstanding in this account pertains to the share of Telangana State Civil Supplies Corporation as per the internal adjustment between the two corporations, liquidation of this account need to be prioritized,” the letter said.
The food credit accounts are to be liquidated before availing fresh loan for subsequent season.
Credit rating
The issue about the ownership of the food credit account was continuing since Bifurcation of erstwhile Andhra Pradesh without any favourable resolution. The delay in resolution was against the credit discipline and would also affect the State’s future prospect of raising funds through market as the event of default would also be reported to the RBI through Central Repository of Information on Large Credits (CRILC) database.
“Food credit account is being participated by almost all the banks, including the State cooperative banks, and any default in the conduct of the facility will adversely impact all the participatory banks,” the letter said. It mentioned two accounts (RBI Account VII KMS with current outstanding ₹ 3,453.41 crore and RBI Account VIII KMS with outstanding of ₹ 254.81 crore).
Credit apportionment
Senior officials said there were discrepancies with regard to apportionment of cash credit between the two States post Bifurcation of the erstwhile undivided Andhra Pradesh Civil Supplies Corporation. The State had repaid ₹ 2,310 crore to the cash credit account of AP Civil Supplies Corporation and only ₹ 452.47 crore was due to AP Civil Supplies Corporation instead of ₹ 865.86 crore as claimed by AP. Moreover, an amount of ₹ 354.08 crore, claimed by AP Civil Supplies Corporation as subsidy from the Central government, was reflected as liability of the Telangana State Civil Supplies Corporation. “This is incorrect as subsidy claimed would be released to the AP Corporation and not to Telangana,” an official said.
The issue figured in the recent meetings of the officials to resolve the pending bifurcation issues wherein the State sought permission to service monthly interest of ₹ 1,799.47 crore as communicated by the SBI. “The interest paid by the Telangana Civil Supplies Corporation if found to be excess at a future date will be adjusted against the principal amount due to AP,” according to the minutes of the meeting between the two States held recently.
