Cashew turns deadly nut

KOCHI: The dark clouds hanging over the cashew industry in Kollam is threatening to become a destructive thundershower anytime with the informal moratorium on the repayment of loans by small and medium cashew processors set to be over on May 31. The banks are sitting over the proposals for rehabilitation submitted by the Kollam Cashew Manufacturers & Exporters Association (KCMEA) despite the assurance they had given to Chief Minister Pinarayi Vijayan during a meeting held in February.

The Cashew Export Promotion Council of India (CEPCI), another industry body in the sector, has sought an extension of the moratorium to December 2018.   Speaking to this newspaper, KCMEA president S. Ravindranathan Nair demanded that the banks discard their non-cooperative attitude and take proactive measures by helping the industry to tide over the present crisis. “We have submitted individual restructuring proposals for 48 factories but the banks concerned have shown no interest in taking them forward,” Mr Nair said. “This is completely against the assurance they had given to the Chief Minister.”

The 48 proposals for restructuring were given as per the decision taken in the State Level Bankers Committee (SLBC) following the meeting convened by the Chief Minister. The bankers created all kinds of hurdles including the demand for submission of individual proposals within a time-frame of less than a month. Despite such a tough deadline, the industry submitted 48 applications for restructuring bad loans with a view to reviving the units and repaying the loans as per RBI norms. Only four banks responded to these proposals so far; and they rejected all the proposals. 

The banks show such an approach at a time big borrowers are having a cool time after siphoning off thousands of crores from these banks. “Punjab National Bank (PNB) had no compunction in giving away nearly Rs 14,000 crore to someone like Nirav Modi or such personalities but they show no mercy when it comes to a promoter of a cashew processing unit in the SME sector,” said cashew processor seething with anger. PNB had advertised in the local papers about taking over the possession of assets including home of the promoter of Chothy Enterprises and its associate Devi Cashews. “Banks are spreading fear in the region with no regard for the human life or the viability of the enterprises,” said an entrepreneur. 

According to Mr Nair, banks resorting to the SARFAESI Act 2002 is one of the biggest issues facing the sector. SARFAESI Act is a disaster for the cashew industry and its rehabilitation, says the representation submitted by the KCMEA. The banks are ignoring their “social objective and responsibility in supporting the small industries employing thousands of workers and contribute to the welfare of the economy of the state and the country,” said KCMEA. The most astonishing fact about the crisis in the cashew industry is lack of any in-depth study of the issue despite the sector earning nearly Rs 7,000 crore as export revenue and employing nearly 3-4 lakh persons (majority of them women).  Apart from a quick survey by NABARD, no other official agency had involved in any detailed study of the sector.