Now it's Tobacco Traders' Turn to Go Bankrupt

Source from:  Newindpress.com (in) 08/23/2004

GUNTUR: So far farmers' suicides have been hitting the headlines. Now the tobacco traders, who are known for their lavish lifestyle and affluent business transactions, are going bankrupt. Over 300 tobacco dealers are waiting for the implementation of Reserve Bank's relief package announced last year to bail them out from the debt trap amounted to over Rs 150 crore. Already a tobacco dealer Goutham Gupta had committed suicide here few months ago due to mounting debts. The MPs from the tobacco growing area are meeting the Union Commerce Minister Kamal Nath on Monday evening to discuss the plight of small tobacco dealers, said Guntur MP Rayapati Sambasiva Rao. These small dealers have been in tobacco business for more than four decades. But for the last eight years they have been keeping away from the business due to debts. The Indian Tobacco Association president Ch. Narendra Nath, who will be also meeting the Commerce Minister along with MPs, said due to their absence in the market the competition among traders had fallen drastically. Rayapati Sambasiva Rao said the only way out for these small dealers is that bankers should extend fresh finance after restructuring the existing loans in all eligible cases to enable them to participate in auctions. Though the bankers meeting held with Tobacco Board officials and representatives of the tobacco dealers at Andhra Bank headquarters two months ago has assured early execution of relief package, so far no bank extended the same. The relief package included restructuring of all categories of accounts irrespective of viability of the units by calculating simple interest of 6 percent from September 1999 till the date of restructure. And also reschedule the liability for a period of seven years with one year moratorium. The bankers are also showing disinterest to grant fresh finance to the restructured account holders on the same security already mortgaged with the banks. Narendra Nath said unless the RBI package is implemented most of the small dealers would remain in debt trap even after disposing all their assets. Enditem