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'Include revised definition for restructuring MSME debt'

Aug '20
Pic: Shutterstock
Pic: Shutterstock
While welcoming the Reserve Bank of India's (RBI's) announcement of providing a framework for restructuring of MSME debt, the Indian Texpreneurs Federation (ITF) has requested the country's central bank to include the scheme as per the revised definition of MSMEs notified by RBI vide circular dated July 2, 2020, as it will benefit the spinning sector.

Post-COVID-19, there is immense opportunity for Indian textile companies due to the favourable transition as preferred export destination coupled with strong manufacturing capabilities. To utilise this opportunity, improvement in liquidity is the only catalyst required for the textile companies, and this requirement also materialises with today's RBI announcement of framework for restructuring MSME debt, ITF convenor Prabhu Dhamodharan said in a statement.

"We estimate around 30-40 per cent of companies in our sector (based on a survey of 1,800 companies whose liquidity position is precarious) would benefit immensely through the implementation of restructuring scheme and this could kickstart a revival for the textile industry itself," Dhamodharan said.

"Our only request would be to include this scheme for MSMEs as per the revised definition notified by RBI vide circular dated July 2, 2020, which would enable a comprehensive coverage of companies. This change is much needed for the spinning sector to get eligibility for the scheme," he added.

The key features of the resolution framework, for exposures other than personal loans, announced by the RBI today include constituting an Expert Committee on Resolution of Stressed Assets, with KV Kamath as its chairman. The Expert Committee will make recommendations to the RBI on the required financial parameters, along with the sector specific benchmark ranges for such parameters, to be factored into each resolution plans.

Fibre2Fashion News Desk (RKS)

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