The asset quality of banks in the district has suffered a huge setback as the loans extended to set up/ modernise 18 Common Effluent Treatment Plants (CETPS) in the Tirupur knitwear cluster are fast turning into Non-Performing Assets (NPA) one by one.
“Already, almost 83 per cent of the loans extended to the CETPs have turned NPA with the outstanding presently around Rs 740.13 crore,” Lead Bank sources told The Hindu .
The flow of repayment to the banks, which include the principal and the interest, have become sluggish following the Madras High Court’s order closing the entire dyeing and bleaching units in January 2011.
Even though the dyeing sector subsequently showed signs of revival with many CETPs coming back into operation for the past many months, the repayment did not pick up significantly.
According to bank sources, 422 dyeing units and 101 bleaching units are attached to the said 18 CETPs which obtained bank credit.
The financial institutions that had extended total credit of around Rs. 600 crore to the CETPs in the initial stage include five nationalised banks and Housing and Urban Development Corporation Limited (HUDCO).
Among the banks, the Union Bank of India has the highest exposure to the CETPs with the institution financing as many as nine of the 18 CETPs.
Naturally, the present outstanding with Union Bank of India is the highest at Rs. 421.87 crore.
The outstanding with Indian Overseas Bank, that gave credit to four CETPs, is the second highest at Rs 192.54 crore. The outstanding with the other institutions were: Indian Bank (Rs 6.9 crore), Uco Bank (Rs. 46.62 crore), Syndicate Bank (Rs. 14.15 crore) and HUDCO (Rs. 58.05 crore).
Bank sources said the huge NPA could substantially affect the credit ratings of the banks.
