Food Corporation gets Rs.5,000 crore loan

March 29th, 2011 - 8:14 pm ICT by IANS  

New Delhi, March 29 (IANS) The government Tuesday approved a short-term loan of Rs.5,000 crore to the Food Corporation of India (FCI) to help the state-run foodgrain procurement agency meet its cash requirements during the current fiscal.

The decision was taken at a meeting of the cabinet committee on economic affairs here.

“The interest rate payable will be equivalent to 364 days treasury bills considering a repayment schedule of equivalent period,” said an official statement.

The FCI will repay the loan during the next financial year.

The food procurement and distribution agency normally gets a working capital loan, called the cash credit limit, worth Rs.34,495 crore from a consortium of banks.

The government said FCI had exhausted the current fiscal’s working capital and providing it a short-term loan would work out cheaper than increasing the sanction amount through the cash credit limit, which would allow the agency to borrow more from lending institutions but at a higher interest rate of 10.06 percent.

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