Inter-ministerial panel to be constituted

A meeting of a Group of Officers will be held on July 13 in New Delhi to formulate debt restructuring proposals on a case-by-case basis for the textile industry.

In May, the Union Textile Minister, Anand Sharma, had announced that a debt restructuring package would be considered on a case-by-case basis by individual banks for the industry and that an inter-ministerial committee of senior officials would be constituted to co-ordinate with the industry and banks to expedite the restructuring.

The restructuring proposal included a two-year moratorium on term loans, a special provision in non-performing assets norms to avoid asset reclassification, and converting the working capital eroded into working capital term loans repayable over three-to-five years.

The Department of Financial Services sent a communication last month to the chairmen and managing directors of banks reiterating that banks should consider eligible stressed loan accounts in the textile sector where restructuring, including second restructuring, was required.

In a letter to the Union Ministry of Finance last month, the Reserve Bank of India (RBI) said that it had no objection to the proposal for a two-year moratorium on term loans, and conversion of working capital into working capital term loan. However, the case for asset classification benefit on second restructuring was not justified, it said. The meeting, on July 13, with representatives of the industry and banks will take up discussion on communications of the RBI and the Department of Financial Services.