The Hindu Business Line : Textile revamp fund yet to take off

THE widely perceived view that the textile reconstruction fund (TRF) to bail out the debt-trapped textile accounts announced by the Finance Ministry four months ago is still a non-starter. The fund has found its echo in the Southern India Mills Association (SIMA) organised textile spares exhibition here.

The SIMA Chairman, Mr Vijay Venkataswamy, who chaired the inauguration of the exhibition expressed concern over the delay in the take-off of the TRF.

He appealed to the Joint Secretary in the Ministry of Textiles, Mr Atul Chaturvedi, present at the function that the much-awaited TRF be translated into a `proper working model.'

The Indian Cotton Mills Federation (ICMF) President, Mr B.K. Krishnaraj Vanavarayar, who also participated, however, felt that the success of the debt reconstruction fund depended on the extension of the textile upgradation fund scheme (TUFS) to the units that were covered under the TRF.

"Mere TRF would not alone do to improve the financial health of the textile units and these were to be supported with the TUFS too," Mr Vanavarayar said, adding that unless the prudential norms were relaxed to make the TRF operative, the purpose of floating it would be lost.

Mr Chaturvedi conceded that the TRF scheme needed some more ground-work to make it really operational.

The provision of the `0' coupon in the funding as recommended originally was removed because of the fear that it triggered new defaulters in textile loans.

"Many banks not eligible to raise external commercial borrowings has also been a factor that came in the TRF implementation. With banks finding themselves in the thick of the financial reforms, it will take more time for the TRF to start off," the textile official told presspersons.

He felt that some mechanism had to be worked out before the bankers could be impressed upon on the funding for the textile debt swapping.

Mr Chathurvedi, however, did not accept Mr Vanavarayar's views that TUFS and TRF could go hand-in-hand. "Unless the sick units turns itself into standard assets through debt swapping, it could not access the funds under the TUFS meant for the viable units' modernisation."