The extension of moratorium period of term loan for another three months i.e. up to August 31, 2020 by the Reserve Bank of India (RBI) has come as a sigh of relief for the ailing textiles and clothing industry, The Southern India Mills’ Association (SIMA) has said.
This was among a slew of measures announced by RBI governor Sakthikantha Das.”The MSME package announced by the Union minister of finance on May 13, 2020 under ‘Atmanirbhar Bharat Abhiyan’ would benefit MSME segments and today’s RBI announcements would benefit the non-MSME industrial units to mitigate the financial crisis,” SIMA chairman Ashwin Chandran said in a press release.
The deferment of interest on working capital, reduction of margin money for working capital and the relaxation of prudential financial norms are the welcome features of the announcement made by RBI governor, said Chandran. He added that the extension of the permissible period of pre & post-shipment export credits by three months and the time for remittances against normal imports from six months to 12 months would also greatly help the exporters and importers to ease their liquidity.
“The Indian textiles & clothing industry that had been facing long drawn recession and demanding two year moratorium period for repayment of all term loans well before the COVID impact needs at least another seven months moratorium period i.e. up to March 31, 2021 to avoid large number of textile units from becoming sick and NPAs,” said Chandran,”The international and domestic demand for textiles & clothing is likely to drop by 30 per cent to 40 per cent with the existing lockdown conditions during the current financial year,” said Ashwin and pleaded the government to allow one time debt restructuring for the textiles and clothing industry, as it would greatly help the mother industry that employs over 105 million people to prevent job losses, sustain the survival, and revive from the unprecedented crisis. SIMA chairman pointed out that though RBI has been making announcements, several banks are yet to extend the various benefits relating to interest rate reduction and additional working capital already announced by the RBI on March 27, 2020. He urged the Prime Minister to intervene in the matter, and direct all banks to extend the various benefits announced by RBI immediately so that the industry could tide over the COVID-19 crisis.