Loans of 300 ailing textile mills to be restructured

An inter-ministerial group has submitted a list of over 300 ailing

textile mills to the cabinet, whose loans need to be restructured. The group left it to the Cabinet to extend textile upgradation fund scheme benefits to loans classified as non-performing assets (NPA) after repeated restructuring.

Under the existing clause in the Textile Upgradation Fund Scheme (TUFS), if an account becomes NPA, the interest reimbursement will not be available for that period. But since the industry has requested for a relaxation of this clause, the inter-ministerial group decided to leave the final decision to the cabinet. The group consisted of officials from the Planning Commission, the textile and finance ministries and half a dozen textiles industry representatives.

They agreed to give a two-year moratorium on repayment of term loans and to allowing conversion of working capital into term loans repayable three to five years. This is part of Rs 35,000 crores, three-year debt restructuring package announced in May. Nearly Rs 15,500 crores worth of loans will be restructured in the first year. This includes Rs 12,415 crores in long-term loans and Rs 3,054 crores in short-term working capital loans. Of this, proposals worth Rs 9,938 crores are from mills that went in for repeated restructuring. The package was to be implemented from August 1, but got delayed as sorting out the details took time.