SME Times News Bureau | 22 May, 2020
The Confederation of Indian Textile Industry (CITI) has hailed the
measures announced by RBI Governor Shaktikanta Das on Friday which are aimed at
preserving the financial stability in the system and improving the functioning
of the market.
These announcements will revive the market, boost exports and imports and debt
servicing, said T. Rajkumar, Chairman, CITI.
CITI Chairman thanked the RBI Governor for reducing the repo rate by 40 basis
points under the liquidity adjustment facility (LAF) bringing it down to 4.0
per cent from 4.40 per cent with immediate effect. Accordingly, the marginal
standing facility (MSF) rate and the Bank Rate stand reduced to 4.25 per cent
from 4.65 per cent; and the reverse repo rate under LAF now stands reduced to
3.35 per cent from 3.75 per cent.
Rajkumar said that the industry has been demanding for extending the moratorium
period for a further period of 10 months as earlier announced for the period of
three months (March, April and May) as industries across sectors could not
resume functioning due to containment measures resorted to prevent pandemic
effect and huge cash crunch resulting thereof.
He welcomed the decision of RBI Governor for extension of moratorium period for
another 3 months from June, July and August 2020 and further said it has
brought a definite relief to the industry which is one of the worst hit
industries because of its highly capital and labour intensive nature and
providing employment to more than 110 million workforce.
The announced measures will certainly prevent a number of companies from
turning into NPAs. He hoped that the moratorium period could further be extended
up to March 31, 2021 to ease the financial burden on companies.
He also welcomed the decision of reduction of margin money, and deferring of
interest on working capital for a period of 6 months with an option that the
interest on moratorium can be converted into FITL or Term Loan and can be
repaid by March 2021. However, repaying interest amount within a period of next
six months would be a daunting task for the textile and clothing industry which
is grappling with the lockdown situation at the moment.
CITI Chairman pinpointed that repo rates reduced by RBI many times in the last
one year has not been fully transmitted by banks to borrowers and are very
miniscule. The industry wants the banks should be advised to pass on the full
benefit of the recent and earlier reduction in repo rate by RBI.