No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2007-2008/133 · issued 07 Sep 2007 · ~2 min read
Quick answerRBI directs all Scheduled UCBs to finance an additional 30 lakh ton sugar buffer stock (Aug 2007–Jul 2008) with zero margin. Banks must release Rs 630 crore as additional credit to sugar mills, exclusively for cane price payments to farmers.
What changed
Government created a second buffer stock of 30 lakh tons of sugar for one year from August 1, 2007, on top of the earlier 20 lakh ton buffer. Banks are now required to provide Rs 630 crore in additional credit to sugar mills for this buffer, with no margin requirement. The total outgo from the Sugar Development Fund is Rs 567 crore, and the combined Rs 1,197 crore must be used solely for cane price payments.
What it means for you
UCBs must extend fresh credit of Rs 630 crore to sugar mills against the new buffer stock, with zero margin—meaning higher exposure without collateral cushion. This credit is ring-fenced for cane price payments, so banks need to ensure end-use monitoring. The circular reinforces that earlier instructions from August 14, 2007, continue to apply, so UCBs should align their lending policies accordingly.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Disburse Rs 630 crore as additional credit to eligible sugar mills for the 30 lakh ton buffer stock, with zero margin.
Ensure that the entire Rs 1,197 crore (including bank credit) is used exclusively for cane price payments to farmers.
Refer to and comply with the earlier circular UBD.BPD(PCB) No. 1/13.05.000/2007-08 dated August 14, 2007 for detailed guidelines.
Coordinate with sugar mills and state-level federations to verify buffer stock creation and end-use of funds.
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn05 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the total buffer stock now and the credit amount involved?
The government created a buffer stock of 30 lakh tons (in addition to the earlier 20 lakh tons). Banks must release Rs 630 crore as additional credit, and the Sugar Development Fund contributes Rs 567 crore, totaling Rs 1,197 crore.
Is margin required on this buffer stock financing?
No. RBI explicitly states that no margin is to be kept in respect of buffer stocks of sugar.
What must the funds be used for?
The entire amount of Rs 1,197 crore, including the bank credit of Rs 630 crore, must be used exclusively by sugar mills for payment of cane price to sugarcane farmers.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #2345: UBD.BPD.(PCB)Cir.No.2/13.05.000/2007-08 — "Advances to Sugar Industry - Holding of Buffer Stock" dated September 7, 2007”
📜 Read the original circular — full text as issued by RBI
RBI/2007-2008/133
UBD.BPD. (PCB) Cir.No. 2/ 13.05.000 / 2007-08
September 7, 2007
To
Chief Executive Officers,
All Scheduled Urban Co-operative Banks
Dear Sirs,
Advances to Sugar Industry – Holding of Buffer Stock
Please refer to our circular UBD.BPD(PCB) No. 1/13.05.000/2007-08 dated August 14, 2007 on the captioned subject.
2. Government of India, Ministry of Consumer Affairs, Food & Public Distribution, Department of Food & Public Distribution vide their order dated August 1, 2007 (copy enclosed) have decided to create a buffer stock of 30 lakh tons of sugar for a period of one year with effect from August 01, 2007 to July 31, 2008. This is in addition to the buffer stock of 20 lakh tons created earlier vide their notification dated April 20, 2007. The creation of this buffer stock of 30 lakh tons will involve an outgo of Rs. 567 crore from Sugar Development Fund. Further, Rs. 630 crore is to be released by the Scheduled banks to the concerned sugar mills as additional credit on their buffer stock quantity. The entire amount of Rs. 1197 crore including Rs. 630 crore to be released by the banks will be used exclusively by the sugar mills for payment of cane price to the sugarcane farmers.
3. The Managing Director, National Federation of Cooperative Sugar factories Ltd., New Delhi, The Director General, Indian Sugar Mills Association, New Delhi, All State level sugar federations/ associations of sugar mills have been advised by the Government to inform their member sugar factories of the Government’s decision conveyed vide order dated August 1, 2007.
4. Banks are advised to finance the creation of Buffer Stock as per instructions issued by Government of India. In this connection banks are advised that no margin is to be kept in respect of buffer stocks of sugar. They may also refer to and continue to be guided by the instructions issued vide our circular UBD.BPD(PCB) No. 1/13.05.000/2007-08 dated August 14, 2007 in this regard
Yours faithfully,
(N. S. Vishwanathan)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/133 · issued 07 Sep 2007. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3808&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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