Nafed to sell Rs 1,800-cr bad loans

Saturday, 25 August 2012 19:21 administrator
National Agricultural Cooperative Marketing Federation of India (Nafed) is planning to sell its non-performing assets (NPAs) worth Rs 1,800 crore to asset reconstruction companies. The finance ministry has given permission to Nafed to dispose of its bad loans.
Nafed is the government’s procurement agency for non-cereal crops such as cotton, oilseeds and pulses. It procures such crops from farmers when market rates fall below minimum support prices and sell them when prices recover. It also trades in various agricultural commodities. However, rising interest burden had made it difficult for the agency to continue its normal businesses of trading. Its turnover fell from Rs 6,373 crore in FY10 to Rs 2,008 crore in FY11.
Nafed had entered into alliances with 62 companies since 2003 and had invested a total of Rs 3,962 crore in a tie-up business, taking loans from commercial banks. The federation had posted profits of Rs 88.4 crore from such businesses between 2003-04 and 2005-06. It had also released advances to private companies to undertake import and export.
A number of companies neither imported nor exported and had defaulted in paying. The federation managed to recover Rs 2,900 crore and initiated criminal proceedings against other defaulters. The sum of Rs 1,800 crore includes Rs 1,050 crore principal and an interest of Rs 750 crore.