Retain SBI, IndusInd as Settlement Banks: Tea Lobby
Industry says trade suffered after Tea Board replaced banks for e-auction; wants banks to continue at least till GST rollout
Kolkata: The tea trade wants State Bank of India and IndusInd Bank to continue as settlement banks for pan-India e-auction till the Goods and Services Tax (GST) is rolled out and a clearer picture on payment and invoicing in tea emerges.
Trade suffered after Tea Board replaced SBI and IndusInd Bank with Bank of India as the settlement bank. The module of the eauction was rolled out by Tea Board in June 2016 in all the six auction centres in the country.
The post-auction settlement module is being implemented from September 14, 2016 but the indust- ry faced problems in reconciling payment. The Tea Board held a discussion with stakeholders in October and decided to keep the post-auction settlement process on hold. Subsequently, SBI and IndusInd Bank, which were hand- ling the payment system prior to the pan India e-auction, were brought in as settlement banks.
Recently, Union commerce minister Nirmala Sitharaman has indicated that a new settlement bank will be brought in which has raised the worries of traders.
Following this, Calcutta Tea Traders Association have written to the commerce ministry stating that tinkering with the settlement mechanism may hurt business at a time when prices of tea have dropped by 3% to 5% and demonetisation slowed upcountry movement of tea.
Ideally, pan-India auctions would be better under the GST regime. Currently, there are concerns over interstate transportation of tea. When GST is rolled out, indirect tax on tea will be uniform and help traders ease interstate transport of the commodity. Till such time, SBI and IndusInd Bank should continue as settlement banks for e-auction, a tea executive said.
Indian Tea Association chair- man Azam Monem said, “FY17 has not been a good year for the industry. Demonetisation, payment problems in e-auction and competition from Kenyan tea in the global markets have affected tea trade. Prices of high quality tea have not moved up in FY17 and are lower by 3% -5% against last year though the cost of production is up by 8%10% every year. So at this moment we do not want any changes to happen. We want SBI and IndusInd banks to continue,” Monem said.
A senior executive of the Calcutta Tea Traders Association said some sellers are yet to get their dues and sellers are being asked by Bank of India to submit their transaction statements.
“Reconciliation is going on,” he added.