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

The Economic Times - - Finance & Commodities - Su­tanuka.Ghosal @times­

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.

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