New Delhi: After a lot of pressure, the 54-bank consortium has agreed to reduce the interest rate on cash credits provided to Indian food companies, helping a subsidized bill of 1,100 crore rs every year.
The source said the Bank’s consortium, led by SBI, agreed to cut interest rates earlier this month after a series of negotiations with FCI officials.
Outgo interest in the Ministry of FCI and the Ministry of Food for cash credits around Rs 7,000 Crore every year.
These banks provide 1.6-lakh-crore cash credits every year for food procurement to FCI and state government entities, who buy on behalf of the center, which produces all interest expenses.
“The effective new level of January 1 will be reduced to 6.68% from 7.73%,” said an officer.
While the cash credit limit for the FCI is around Rs 9,500 Crore, around Rs 1.5 lakh Crore for state government agencies with guarantees from the center.
The source said that the food-credit consortium decided that pricing for the FCI cash credit limit would be on average a month of MCLR from the top five lenders instead of the previous interest rate norm of five months from five banks.