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% from 4.40% with immediate effect. Accordingly, the marginal standing facility (MSF) rate and the Bank Rate stand reduced to 4.25% from 4.65%; and the reverse repo rate under LAF now stands reduced to 3.35% from 3.75%.
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 that banks should be advised to pass on the full benefit of the recent and earlier reduction in repo rate by RBI.