Banks Told To Raise Credit Flow To Handlooms

The Reserve Bank of India (RBI) has directed all scheduled commercial banks to step up the flow of credit to the handloom and handicrafts sectors, specially in 172 districts identified by the textiles ministry as having the potential and the concentration for these sectors.

The apex bank has also directed that banks regularly review the progress made in extending credit to these sectors at district level meetings. It has also called for the participation of representatives of the handloom and handicraft sectors in these meetings.

This was conveyed to the chiefs of commercial banks through a recent RBI circular.

The ministry has identified 94 districts in various parts of the country which have potential for handlooms, and 78 which have potential for handicrafts.

 

This directive comes in the light of the potential of these sectors for generating employment and exports.

The sectors together rank second only to agriculture in employment. They account for 15 per cent of the total cloth production of the country and 62 per cent of total production of traditional industries. The National Bank for Agricultural and Rural Develop -ment (Nabard) has a variety of refinance schemes for the purpose. A list of these has also been provided by the RBI.These broad schemes can be categorised as the investment credit facilities, medium-term credit facilities and short-term credit facilities.

Chief among the investment schemes is the automatic refinance facility (ARF) for all financing agencies.

This includes the composite refinance scheme for loans up to Rs 50,000 per borrower for financing block capital or working capital, and the integrated loan scheme for maximum refinance up to Rs 10 lakh per unit with project outlay up to Rs 20 lakh for commercial banks and Rs 15 lakh for other agencies.Nabard also has long term credit schemes for loan amounts beyond the ARF limit and up to the SSI limit. Nabards short term credit facilities are also available for commercial banks.

This refinance facility are available for financing the production and marketing needs of the Primary Handloom Weavers Cooperative Societies in areas where co-operative credit structure is weak.