Food Corporation Invites Bids to Raise Rs 20,000 Crore Short-Term Loan
New Delhi: State-owned Food Corporation of India (FCI), the nodal agency for procurement and distribution of food grains, plans to raise Rs 20,000 crore short-term loans for working capital and has invited bids from scheduled banks.
In the tender, which was floated on December 3 and closes on December 22, FCI has said it is "considering raising short-term loans from the scheduled banks only for 120 days tenure".
The fund would be utilised to meet its short-term fund requirement for procurement and distribution of food grains, the tender document noted.
This is the third time in this fiscal year that FCI is floating a tender to raise short-term loans. It had raised Rs 20,000 crore each in two tranches and the amount was repaid after receiving food subsidy payment from the government.
FCI regularly raises bank loans to fund procurement and distribution operations, because of a delay in payment of subsidy as well as huge food subsidy arrears.
FCI currently has a food subsidy arrears of around Rs 56,000 crore. Of which, about Rs 50,000 crore is carry-forward from last fiscal year, sources said, adding that the corporation is left with no other option but to raise funds.
In the earlier two tranches, FCI raised funds from banks at interest rates in the range of 9.95-10.25 per cent.
According to tender, the minimum bid has been fixed at Rs 250 crore.
"Rate of interest quoted is to be linked with the base rate of the bank quoting the plus/minus to the base rate to arrive at the effective rate at which the offer for short-term loan can be extended to FCI," says the tender.
Banks can bid for different tenures but the final call will be taken by the corporation.
"Neither the government of India guarantees nor any other security is available for this short-term loan and this would be an unsecured one," the tender said.
On Saturday, the Centre said it has released Rs 93,894 crore so far this fiscal year by way of food subsidy out of annual allocation of Rs 1,10,500 crore.