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New proposal to recast Indian textile sector loans
21
Feb '12
The Ministry of Textiles, Government of India, has forwarded a revised proposal to the Reserve Bank of India (RBI), through the Ministry of Finance, for recasting Rs. 1 trillion of loans extended to the textile industry.

Last month, the RBI had turned down a Textiles Ministry proposal for restructuring Rs. 1 trillion worth of textile loans, mainly from public sector banks, saying such a step would not be in accordance with the best international practice.

Speaking at a buyer-seller meet of the powerloom sector, Textile Commissioner AB Joshi said the Reserve Bank of India (RBI) turned down the first proposal put forward by the Ministry, as it had come within the two-year time period after the 2008-09 recast of loans.

Mr. Joshi said, the Ministry is seeking a bailout for the country's troubled textile industry and the revised proposal is being routed to the RBI through the Ministry of Finance (MoF). The RBI had already conveyed its feedback to the MoF and its Banking Division would carry on further consultations with the RBI, he added.

The textile sector started facing problems from October, 2010 onwards when there was a sudden surge in prices of cotton and cotton yarn. Subsequently, there was a substantial decline in yarn prices from April 2011 onwards owing to poor demand due to debt crisis in the Eurozone and a slowdown in the US economy, which together account for nearly 65 percent of the country's textile exports. These events led to a huge credit crisis in the textile industry.

Fibre2fashion News Desk - India

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