New Delhi, Mar 28 (PTI) Cooperative Nafed has settled debt worth Rs 478 crore with eight banks, mainly through cash and sale of a prime property in the national capital, the Agriculture Ministry said today.

The one-time settlement, which includes payout of Rs 220 crore in cash, will help Nafed to undertake smoothly the procurement operations on behalf of the government.

Nafed had incurred bad debt of around Rs 1,600 crore in its tie-up businesses during 2003-06. The cooperative had provided financial support of Rs 3,945 crore to 62 private parties for trading in non-agri items and out of that, many turned defaulters.

Nafed has been incurring losses because of mounting interest liability on outstanding loans due to its failed tie-up businesses. It had sought a revival package from the government to run its operations.

“The One Time Settlement with the lender banks has been made at Rs 478 crore with cash payment of Rs 220 crore and assignment of sale rights of one of its prime properties located at Lawrence Road, New Delhi,” the Agriculture Ministry said in a statement.

In addition, the lenders are entitled to the assignment of auction right of the property of one of the defaulters of its tie-up business conducted in the years 2003-05, it said.

The debt settlement agreement was signed by the deputy general manager of Central Bank of India on behalf of lender banks in the presence of Nafed’s additional managing director.

The ministry said that Nafed procures oilseeds, cotton, pulses and copra at the support price on behalf of the government under the Price Support Scheme (PSS).

Though the fund requirement of the PSS was separately provided to Nafed through sovereign guarantee, its problems with banks many a times created hurdles in smooth drawals even against government guarantee, affecting payment to the farmers, it explained.

“It is hoped that with this settlement, the PSS operations will be more smooth and effective,” the ministry added.

During the last three years, Nafed has made a record procurement of oilseeds and pulses at minimum support price under the PSS. Further, it has procured around 90 per cent of the buffer target of pulses.

This settlement has brought much relief to the organisation and its employees in particular and cooperative sector in general, the ministry added.

This is published unedited from the PTI feed.