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Relief Package to the Tea Sector proposed by Ministry of Finance

In terms of the Cabinet decision dated 7th January, 2009, it has been decided to implement a concessionary loan scheme on a short-term basis for registered tea factory owners with a view to enabling them to meet their obligations to tea small holders on account of green leaf supplied to them. Towards this objective, the Sri Lanka Tea Board will identify the registered tea factory owners who will qualify for consideration by banks for such assistance. Lending institutions are required to obtain specific recommendation from the Sri Lanka Tea Board confirming the eligibility of the borrower for the loan facility.

02. In terms of the said Cabinet decision, the Government will provide 100 percent Treasury Guarantee to lending banks to facilitate the disbursement of the loan subject to the following conditions.

  1. Quantum of Loan

One month working capital requirement based on the turnover in October 2008 to registered tea factory owners. Loan would be available to the individual registered operational tea factories only. Applications may be forwarded to relevant bank through the Sri Lanka Tea Board.

  1. Interest Rate

To be determined by the bank based on customer/ bank relationship. The Government will provide interest subsidy of 6 percent through the Tea Stabilization Fund setup under the chairmanship of the Director, Economic Research of the Central Bank of Sri Lanka.

  1. Repayment Period

Within a maximum period of 2 years commencing from the first auction after obtaining the loan as a first charge on sales proceeds.

  1. Security

Existing mortgages or any other security available with the respective bank in respect of the factories to be extended to cover these loans.

Guidelines pertaining to implementation of the scheme is to be issued by the Sri Lanka Tea Board in consultation with the Ministry of Plantation Industries.


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