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Loans dry up for apparel sector

There has been a huge negative impact on Indian apparel industry due to the current banking scenario. The documentation system of banks, which was fairly strong earlier, has now become more stringent. Even ad hoc limits take nearly three months to get executed, and a loan is something apparel manufacturers cannot expect easily now.

Apparel manufacturing is one business which requires hefty investments due to its capital and labor-intensive nature and longer rotation cycle. Garment manufacturers and exporters largely depend on banks for their funding. Banks are now stricter about rating and are going in for three different ratings to make sure of the credentials of a company and avoid taking any risks. Due to the change in laws in the Middle East and Dubai, buyers from these countries are now reluctant. With most of the business coming from these two markets, there has been a downfall of nearly 30 per cent in business.

Balance sheets of apparel manufacturers, especially exporters, do not look healthy. This results in a huge pressure on financial limits. In addition, after demonetisation and GST, fund availability is not as easy as it used to be. For an industry already in stress, this new attitude of the banks has only amplified the troubles. PSU banks are not lending money, and even private banks are not taking stressed assets.

 
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