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Govt. to restructure loans worth Rs 35,000 crores for the textile sector

30 May 2012 Evaluate

Acknowledging that the textile industry needs help during the current times, the government has decided to restructure loans worth Rs 35,000 crores for the sector. The move is likely to come as a big relief for the sector which is reeling under loans worth Rs 1,55,809 crore.

The textile sector has been recently hit by poor global as well as domestic demand. Also yarn prices have taken a hit which has reduced the ability of the sector to pay back its loans. It is also facing difficulty in financing its working capital. 

However now the government will be issuing directions to the banks and an inter-ministerial committee of senior officials will be constituted to expedite the process of restructuring. This decision was taken in a meeting between the Commerce and Textiles Minister Anand Sharma and Finance Minister Pranab Mukherjee.

 Textile industry associations have also been demanding that the industry be granted a two year moratorium on long term loans. However the Finance Ministry has said a decision regarding this will be taken in conjunction with the RBI.

Furthermore, the Finance Ministry, in a bid to avoid asset reclassification may examine the demand for special provision in NPA norms. It may also aid the eroded working capital by converting it into working capital term loans repayable over a period of 3-5 years.

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