In a big relief to the debt- trapped textiles industry, the government today decided to restructure loans worth Rs 35,000 crore.
The decision for restructuring of bank loans, estimated Rs 1.55 lakh crore for the sector, was taken at a meeting between Commerce and Textiles Minister Anand Sharma and Finance Minister Pranab Mukherjee here.
"Government agreed that there is a need to support the Textiles industry in this time of crisis. Textiles Minister said that the total outstanding debt of textiles sector is Rs 1,55,809 crore of which debt of Rs 35,000 crore needs restructuring," an official statement said.
The sector has been hit by a sharp fall in cotton yarn prices and poor domestic and global demand. Textile units are facing difficulty in repaying term loans and financing working capital.
"Government directions to banks would be issued in this regard," it said adding "an inter-ministerial committee of senior officials would be constituted to coordinate with industry and banks for expeditious restructuring".
On the demand of textiles industry associations for a two-year moratorium on long term loans, it said the Finance Ministry would examine the issue in consultation with the RBI.
"...There was agreement with the Ministry of Finance that the debt restructuring package would be considered on a case to case basis by individual banks, the statement said.
The Finance Ministry would also examine the demand for special provision in NPA norms to avoid asset reclassification and enable working capital eroded to be converted into working capital term loans repayable over a period of 3-5 years.
Reacting on the move, Confederation of Indian Textile Industry hoped the RBI would issues necessary instructions to the banks in this regard as early as possible.