Textile Ministry demands extension of credit limit for cotton mills

17 Sep '08

2 min read

In its effort to help traders and millers lift stocks during the initial phase of the coming cotton season which is just round the corner, the Textile Ministry is seeking increased bank credit for them.

Mr JN Singh, Joint Secretary in the Textile Ministry stated while confirming the news to fibre2fashion that they have placed a proposal before the Finance Minister that banks extend the tenure of working capital from three months to six months.

In an exclusive interview with Fibre2fashion, Mr Sunil Kumar Jain, President of North India Textile Mills Association stated, “We have demanded an increase in bank credit tenure to 8 months. Margin limit to be deposited in the bank for availing a 75 percent credit limit currently stands at 25 percent while we are requesting to bring it down to 5-10 percent margin for textile mills.”

Presently, banks are providing working capital loans up to 75 percent of the total requirements projected by the mills and for a period of three months. Moreover, eligibility of the millers to apply for loan depends on their credit worthiness while the interest rates are set in accordance with the current lending rates.

The industry is demanding the loan limit to be raised to at least 80 percent along with an extension of the tenure to eight months. Mr Sunil Kumar Jain also added by saying that the demand for an extension of credit limit was put forward for over three years now and with the matter being finally taken seriously, mills have a reason to rejoice.

Fibre2fashion News Desk - India

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