26 May 2016 Current Affairs: IndusInd Bank , which has been the settlement bank for e-auction for the Rs 17,000 crore tea industry, is set to lose the status and Rs 8,000 crore business in the process.
The Tea Board has selected Bank of India as the new settlement bank for pan-India e-auction from sale number 25, which falls on the third week of next month.
State Bank of India, which handles e-auction of tea for the KOLKATA auction centre, will also lose the status of a settlement bank. The move has upset tea brokers.
It took us almost three months to work out the entire process when the settlement bank concept was introduced in e-auction way back in 2009 .
Since then, it has been going on smoothly. Suddenly, we came to know that Bank of India has been selected by Tea Board as the settlement bank. Now we have to redo the entire thing. This is not good for the trade.
BoI will start working as a settlement bank for all the six auction centres,Kolkata, Guwahati, Siliguri, Cochin, Coonoor and Coimbatore from the third week of June
According to the scheme of things, tea buyers at the auction pay IndusInd Bank against purchases and the bank, in turn, pays it to the seller the next day.Now, with Bank of India coming in as the new settlement bank, IndusInd would lose the float money, which is the money lying with the bank during the time between a deposit being made and payment to seller is completed.
IndusInd Bank did not respond to ET's queries on the development. A questionnaire sent to IndusInd Bank on May 20 remained unanswered till press time.
The existing electronic auction process enabled buyers from region specific auction centres to purchase teas from that specific centre. The launch of pan India auction platform will encourage buyers from all auction centres to participate through a unified digital platform.