Working to resolve Punjab foodgrain issue, says MoS, Finance Jayant Sinha

MUMBAI: Government is working with regulators, banks and other agencies to resolve the issue of missing foodgrain stocks in Punjab, Minister of State for Finance Jayant Sinha said today.

"We are working with the regulators as well as the banks and various other government agencies to ensure the matter with respect to the food stocks in Punjab is satisfactorily resolved," Sinha told reporters here.

"The issue raised by the Reserve Bank is correct from the standpoint of the regulator. Banks' explanation is also correct. We need to find a right solution for the issue," Sinha added.

He did not specify the underlying value of the missing foodgrain or if the problem exists in other states as well.

Sinha said the government will investigate the case and come out with the actual position in a few days.

According to reports, foodgrain procured by the Punjab government worth Rs 20,000 crore is missing from the state godowns.

However, the Punjab government denies the reports and has said all stocks procured over the years have been duly accounted for.

Some 30-odd banks, led by SBI, had extended loans of Rs 12,000 crore to the state for its foodgrain procurement programme.

The Reserve Bank has asked the lenders to set aside money as provisions for non-performing assets. Loans to state government are considered sovereign, and therefore banks say there is no need to set aside money.

Banks are already treading on thin ice with RBI Governor Raghuram Rajan ordering banks to clean their books by next March. This had led to banks making massive provisions in the December quarter, which is expected to continue in the fourth quarter of 2015-16 as well.

Reports said lenders have threatened to stop lending to Punjab, a primarily agrarian state, in the new season if the issue remains unresolved.

Out of the Rs 1 trillion worth food credit, around 40 per cent (Rs 40,000 crore) are lent to Punjab alone, which means that the state procures 40 per cent of the overall food procurement on behalf of the FCI/Centre.