Nafed debt settlement deal

Nafed strikes Debt Settlement Deal with a view to fillip Price Support Operations


Popular Agricultural Cooperative, Nafed (National Agricultural Cooperative Federation), struck a debt settlement deal valued at Rs. 472 crore with as many as 8 banks that lent money to the cooperative. The deal with help the bank gain more access to credit facilities, and help it lay its focus on enhancing price support operations.

According to the essential terms of the debt settlement deal, Nafed is expected to pay the banks Rs. 220 crore in cash, with the remaining amount being recovered through the sale of Nafed’s property on Lawrence Road in New Delhi and the auctioning of a property belonging to one of Nafed’s defaulters.

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Nafed was in the midst of an uncomfortable state of affairs after private companies borrowed money from banks after the cooperative provided guarantees for the same. The private companies that entered into deals with these banks moved their loans without providing adequate/necessary collateral.

Nafed is the apex tasked with implementing price support measures and cooperative agricultural marketing for the government of India. The cooperative implements Price Support Schemes for oilseeds, pulses, cotton and copra with a view to help farmers increase their income through selling these crops, especially when prices fall below the Minimum Support Price (MSP).

Although the Central Government provides adequate funding to Nafed to carry out its operations, growing NPAs over the last many years have resulted in delayed payments to farmers covered under the Price Support Scheme. Price Support Operations, following the debt settlement deal, are expected to be more smooth and seamless.


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