CITI hails the decisions made by Monetary Policy Committee (MPC)

New Delhi, Thursday, August 06, 2020: Confederation of Indian Textile Industry (CITI) Chairman Shri T. Rajkumar welcomed the decisions made by Monetary Policy Committee (MPC) headed by the RBI Governor Shri Shaktikanta Das, to provide immediate relief for the industries from the Covid-19 crisis.

CITI Chairman stated that the announcement made by RBI Governor regarding one-time restructuring of loans for all stressed MSMEs without classifying them as NPAs is a welcome and timely move. Shri Rajkumar further pointed out that the Indian Textile & Apparel (T&A) Sector is a highly capital-and-labour-intensive sector and the ongoing Covid-19 crises has badly affected this sector. The one-time loan restructuring will provide some relief to all the T&A companies which will fall under the MSME criteria.

Shri Rajkumar also welcomed the decision of the RBI for constituting an Expert Committee under the Chairmanship of Mr. K.V. Kamath for one-time restructuring of loans, which shall make recommendations to the RBI on the financial parameters, along with sector specific benchmark ranges for such parameters, to be factored into resolution plans.

CITI Chairman told that Textile & Apparel companies usually carry a stock of few months and unless the demand of textile products comes back, industry will not be in a position to take on fresh orders as well. This has led to an unprecedented liquidity crisis in the T&A Sector. He further stated that the banking sector today is hesitant to lend to T&A Sector due to uncertainty of cash flows. While, the recent debt restructuring is focussed only on MSME sector, however, in T&A Sector, MSMEs are highly dependent on large manufacturers and large apparel retailers. If the liquidity crises among the larger companies is not addressed soon, it will have a multiplier effect on the MSMEs as well.

Shri Rajkumar made an appeal to the RBI Governor to address the issue of liquidity crises of the entire T&A Sector by taking certain measures like directing all the banks to lend 25-30% extra working capital to T&A industries for which Government of India may extend partial guarantee, allowing conversion of part of Working Capital facilities availed by Retail Businesses into Working Capital Term Loan (WCTL) and reassessment of working capital limits, removing NPA classification temporarily for all businesses availing restructuring or refinancing due to the COVID crises.

Shri Rajkumar hoped that the Government of India and RBI will listen to their pleas to safeguard the interest of the T&A sector which employs about 110 million people directly and indirectly and contributes about 11% in the foreign exchange earnings.