Home / Knowledge / News / Textiles / Textile among 26 sectors to get relief, RBI panel suggests

Textile among 26 sectors to get relief, RBI panel suggests

08
Sep '20
Pic: Shutterstock
Pic: Shutterstock
The Reserve Bank of India (RBI) yesterday said it has broadly accepted the recommendations of the five-member expert committee headed by banker K V Kamath that identified 26 sectors affected by the COVID-19 crisis and prescribed six key ratios within which the resolution plan has to be finalised. Textiles and retail and wholesale trade are among sectors identified for relief.

For sectors not mentioned, the ratios can be decided by the individual bank. These ratios essentially determine how much debt a company can build up in relation to its capital and income.

The panel tabled its report on September 4 wherein it has suggested financial parameters that include aspects related to leverage, liquidity and debt serviceability, RBI said.

The 26 sectors selected by the panel for the resolution framework are: Power, construction, iron and steel manufacturing, roads, real estate, trading wholesale, textiles, chemicals, consumer durables (FMCG), non-ferrous metals, pharma, logistcis, gems and jewellery, cement, auto components, hotels, mining, plastic products manufacturing, automobile manufacturing, auto dealership, aviation, sugar, port and port services, shipping, building materials, and corporate retail outlets.

Textiles, engineering and retail and wholesale trade, which were repaying loans before the COVID-19 crisis, can look forward to easier terms of repayment while non-banking finance corporations (NBFCs), power, steel and real estate businesses that were struggling even before the crisis may have to face the pain of recovery action.

Considering the large volume and the fact that only standard assets are eligible under the proposed scheme, a segmented approach of bucketing these accounts under mild, moderate and severe stress may ensure a quick turnaround. To complete this task, simplified restructuring for mild and moderate stress may be prescribed. Severe stress cases would require comprehensive restructuring, the panel recommended.

All sectors must have a debt service coverage ratio equal to or more than 1 and all banks are required to have a current ratio of at least 1. This means that the company’s debt due in a year or less are on a par with their assets.

The only exception is aviation, where a ratio of 0.4 has been allowed, because airlines follow the cash and-carry model for revenue purpose, thereby creating almost nil debtors and higher current liabilities in form of advance received from customers. Also, airlines enjoy 6-9 months of credit from vendors.

Fibre2Fashion News Desk (DS)


Must ReadView All

Pic: Ritu Manoj Jethani / Shutterstock.com

Apparel/Garments | On 31st Jul 2021

US firm Steve Madden moves production to Mexico & Brazil from China

As supply chain disruption remains a significant challenge, American...

Pic: GBG USA

Apparel/Garments | On 31st Jul 2021

Apparel & footwear firm GBG USA files for bankruptcy protection

GBG USA, an indirect wholly owned subsidiary of Global Brands Group...

Pic: Shutterstock

Apparel/Garments | On 31st Jul 2021

Asian garment industry market concentration, consolidation rise: ILO

Although Asia's garment market rose in size in value terms before the ...

Interviews View All

Textile Industry, Head honchos

Textile Industry
Head honchos

Trainers faced immense challenges as most were not tech-savvy

Textile Industry, Head honchos

Textile Industry
Head honchos

Always best to produce under own supervision

Textile Industry, Head honchos

Textile Industry
Head honchos

There was a certain switch, but it was not 100% pandemic related

Shyam Gupta,

Shyam Gupta

Established by <b>Shyam Gupta</b> in 1978, Gargee Designer's (GD) offers...

Sanjay Vakharia,

Sanjay Vakharia

One of the first few Indian denim brands, Spykar, established in 1992, was ...

Bharat Ahuja,

Bharat Ahuja

A mono store brand, <b>Bharat Ahuja's</b> Desire Design Studio has emerged ...

Karan Bose, Hula Global

Karan Bose
Hula Global

Hula Global, a leading isolation gown manufacturer in India, has been...

Madison Maxey, Loomia

Madison Maxey
Loomia

Loomia designs and manufactures soft circuit systems that can be produced...

Suresh Patel, Non Woven Federation of India

Suresh Patel
Non Woven Federation of India

The Non Woven Federation of India (NWFI), representing the regional...

Anjali Bhaskar, Samatvam

Anjali Bhaskar
Samatvam

Anjali Bhaskar has an experience of 12 years in the fashion industry. She...

Niti Singhal, Twee In One

Niti Singhal
Twee In One

Best known for convertible clothing, Indian brand Twee In One by designer...

Megha Kumari & Jigar Mali, Label Megha & Jigar

Megha Kumari & Jigar Mali
Label Megha & Jigar

New Delhi based label Megha &amp; Jigar blends India's unique handcrafts...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


July 2021

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Advanced Search