Coffee debt-relief package runs into RBI roadblock

The implementation of the Coffee Debt Relief Package, 2010, has run into trouble, with the Reserve Bank unwilling to treat the non-performing assets of coffee growers, as on June 30, 2009, as standard assets. The Union Commerce Ministry has urged RBI to reconsider its position, while requesting it to issue guidelines on loan restructuring at the earliest. Banks cannot effectively implement either the waiver or the restructuring of loans without being clear on how NPAs should be treated. If RBI does not relax its position on NPAs, the purpose of the package will be defeated. Meanwhile, the Indian Banks' Association, in its meeting held a month ago, had also suggested that the coffee growers' outstanding loans be restructured. Banks in Karnataka with exposure to the coffee sector have also urged the RBI to treat NPAs as regular assets.