FIs seek quarterly

Under the TUF launched on April 1 this year, government through various implementing agencies extend five percentage points interest subsidies to textile units to upgrade and modernise plants to gain competitiveness in the post-multi fibre arrangement era beginning 2005.

Currently the FIs make the interest refund to the companies on a quarterly basis, though the institutions are refunded the concessions only on a half-yearly basis.

Textiles secretary Shyamal Ghosh said the government was open to the demand of the financial institutions for a quarterly refund and added that the matter would be taken up with the finance ministry.

The premier lending bank would also soon take a decision about lending to 26 more units involving project cost of Rs 937 crore with the institution8217;s share being about Rs 330 crore, Agarwal said.

Responding to demands that the FIs extend the same concessional finance to schemes approved before the launch of TUF, he said quot;the institutions are open to such pleas but the decisions would very from cases to case depending on the merit of the schemequot;.

Total sanctions under the TUF scheme by IDBI, IFCI, ICICI Exim Bank and SIDBI till October 31 was Rs 1158 crore involving a project cost of Rs 2351 crore of 62 units, Agarwal said.

However, aggregate disbursement under the scheme during the period was a meagre Rs 190 crore, he said adding that the financial institutions were trying to fine tune the processing of applications to speed up the disbursement process.

Agarwal said IDBI8217;s exposure in the textile sector was the second highest at 13.2 per cent after the power sector where the bank has a 14.25 per cent exposure.

IDBI has also estimated the government reimbursement to be Rs 30 crore for 1999-2000 and Rs 180 crore for 2000-01. According to Chennai-based Loyal Textile Mills Ltd managing director Manickam Ramaswami, the tough criteria adopted by institutions on assessing project viability and stipulations concerning profits for the last three years were a major reason for the slow progress of the scheme.

He suggested that the textile units be segregated into three groups 8211; healthy and profit making, viable and loss making and loss making 8211; for the purpose of loan distribution under TUF.

While efforts should be made to consolidate the viable and profit making units, the second category should be given adequate attention by the FIs by providing concessional finance turning them into profitable ventures, he added.