The announcement by RBI has finally provided a sigh of relief to the ailing textile industry. Earlier, the industry had pleaded to the government to provide one year moratorium for payment of loan and interest, a 25 per cent additional working capital without additional collateral or margin money and defer payment of electricity charges for three months.
The COVID-19 pandemic has created severe financial stress after the announcement of 21 days lockdown. As the textile industry is highly capital, labour and power intensive, it is facing the most adverse effect.
The chairman of The Southern India Mills’ Association (SIMA), Ashwin Chandran welcomed the announcement of three months moratorium period for payment and also advised the banks to re-calculate the drawing power liberally and extending additional working capital facility, substantially reducing the Repo rate and thereby enabling the financial institutions to reduce the rate of interest and making provisions to exclude the three months moratorium period for asset re-classification and credit rating.
The association appealed to the Prime Minister to advise RBI and banks to give clear instructions to provide additional working capital to the tune of 25 per cent without any additional collateral or margin money. Chandran urged the PM to advise RBI to issue clear direction immediately for extending the moratorium for the payment of interest on term loans as the March 2020 quarter is fast approaching. He also requested the State Governments in South India to defer payment of current consumption charges for three months and waive the demand charges for electricity.