Companies & Sectors
RBI for debt recast of textile units on case-by-case basis

The special window will be provided by all banks to the textile sector to consider debt recast between 1st August and 30 October 2012

 

New Delhi: Rejecting across the board restructuring of loans for the cash-starved textile sector, the Reserve Bank of India (RBI) has asked banks to consider debt recast for the industry on a case-by-case basis, reports PTI.

Banks have been advised to look at debt recast on a case-by-case basis and special window will be provided for restructuring, official sources said.

The special window will be provided by all the banks to the textile sector between 1st August and 30 October 2012, sources said.

The Finance Ministry has asked banks to consider stressed loan accounts in the textile sector for restructuring, including second restructuring, so that viable loan accounts are revived and the financial health of the units are restored.

The sector has been hit by a sharp volatility in cotton yarn prices and poor domestic and global demand.

As a result textile units were facing difficulty in repaying term loans and financing working capital and demanded debt restructuring for the entire sector.

Textile industry associations were seeking a two-year moratorium on long term loans.

The total outstanding debt of textiles sector is estimated at Rs1.6 lakh crore of which debt of Rs35,000 crore require restructuring.

According to a senior bank official, large borrowers in man-made and natural fibres were relatively safe, and the problem was only in the small and medium segments.

The softening of cotton prices are expected to improve the profitability of the sector and companies would be in a position to service their loans, the official added.

In order to deal with the global meltdown triggered by the Lehman Brothers crash, RBI brought in a special dispensation providing for a second restructuring for the entire textile sector in 2008.

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COMMENTS

MAHENDER

4 years ago

WHAT ABOUT COTTON GINNING FACTORIES

Savings account interest rates to stay at 4%, says Puri

The HDFC Bank MD and CEO said only a couple of banks have increased their pricing because they were not getting traction on the savings deposits front

 

Mumbai: Terming the impact of Reserve Bank of India (RBI)'s decision to deregulate savings accounts rates last year as 'insignificant' for HDFC Bank, Aditya Puri, its managing director and chief executive has said depositors should be content with 4% interest offered by larger lenders, reports PTI.

"The deregulation of the savings account has not had a substantial impact on our growth," Puri told shareholders at the AGM over the weekend.

"The savings account is a transaction account and there is a cost attached to it. So, 4% rate is fair and that's why you see most of the larger banks have not changed it," he said.

Puri further said only a couple of banks have increased their pricing because they were not getting traction on the savings deposits front.

Following RBI's move last October to lift the interest rate cap of 4% on savings account, a few lenders like YES Bank, Kotak Mahindra Bank and Saraswat Bank increased their offerings up to seven%, giving rise to expectations that there will be a flight of deposits to these lenders.

However, bigger banks, including State Bank of India, ICICI Bank and HDFC Bank, which enjoy a very high%age of the cheaper current and savings account (CASA) deposits, maintained a status quo keeping the savings rates unchanged.

HDFC Bank's CASA share in the total base fell to 46% as of 30th June, versus 49.1% a year ago on a lower growth in current account deposits.

However, there was a growth of 18.4% on savings deposits to Rs76,674 crore, according to Q1 numbers.

Puri said economic feasibility requires a balance of at least Rs7,000 in every savings account as a host of services are to be offered free of charge to the account-holder.

He recommended the fixed deposit route to all the depositors who want a larger interest rate on their deposits.

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COMMENTS

T D Sharma

4 years ago

This will only act as a positive disincetive to saving and encourage consumerism. The dishonest motive is too eloquent.

Rajiv Gandhi Equity Scheme norms to come by month end

Under the investment scheme, 50% tax deduction would be allowed to retail investors with annual income less than Rs10 lakh, for investment up to Rs50,000, with a lock-in period of 3 years.

 

New Delhi: The Finance Ministry is likely to come out with details of the Rajiv Gandhi Equity Scheme, which is aimed at boosting retail investments in capital market, by the last week of July, reports PTI.

"RGESS norms will come out by last week of July," a senior finance ministry official said.

In order to encourage savings and improve investment in capital markets, former Minister for Finance, Pranab Mukherjee in 2012-13 Budget had announced Rajiv Gandhi Equity Scheme, under which 50% tax deduction would be allowed to retail investors with annual income less than Rs10 lakh, for investment up to Rs50,000, with a lock-in period of 3 years.

A retail investor can avail the scheme only once in a life time. This was the first-ever tax benefit scheme announced by the government to encourage retail investors participation in the equity market.

By offering this scheme, the government aims at channelising household savings into stock markets.

To make the scheme more attractive for retail investors, the ministry is also considering reduction in the lock-in period under the scheme to one year from the proposed three years.

Recently, market regulator Securities and Exchange Board of India (SEBI) has asked the government to route tax-saving Rajiv Gandhi Equity Savings Scheme (RGESS) through MF to minimise risk associated with direct stock investment for new investors.

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