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Thursday, 12 March 2020

Amidst Yes Bank crisis, textile and apparel industry too get impacted

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Indian apparel manufacturers are facing heat amidst Yes Bank crisis! However, so far no major names that have been impacted have come forward.

The Reserve Bank of India (RBI) has placed aggregate limit across all accounts (savings, term or current) of Rs. 50,000 on Yes Bank deposits till 3 April. Though now it is being said that this ban may be lifted by 23 March.

India’s central investigation agency has lodged an FIR in this case and Rana Kapoor, Founder of the bank, has been taken into Enforcement Directorate’s custody till 11 March.

A cluster of Gurgaon has been affected directly; besides, some apparel manufacturers also have their accounts in this bank.

An official of the bank told Apparel Resources that there are few textile firms across major hubs, which have their accounts in Yes Bank. Majority of them are MSMEs as Yes Bank not only has good reach, but also funding in this segment.

Animesh Saxena, MD, Neetee Clothing who is also associated with some leading trade bodies told, “To utilise a cluster scheme of Haryana Government, 11 apparel manufacturers jointly formed a cluster and deposited Rs. 20 lakh in Yes Bank and State Government was supposed to deposit Rs. 1.80 crore but now this project is on hold.”

He further added that some orders of machinery placed as deposit by the State Government was almost confirmed.

Apparel Resources approached some garment manufacturers and their finance teams across various hubs and discussed the issue. None of them confirmed of hearing any of their fellow apparel exporters or domestic manufacturers facing issues due to the crisis; however, some employees from different apparel companies do have their accounts in Yes Bank and they are facing a tough time.

“For many years, one was hearing negative news in this regard and almost everyone was aware that something negative was going to take place,” shared a Mumbai-based Ashok Rajani, Ex-Chairman, Apparel Export Promotion Council (AEPC) and founder of Midas Touch Exports.

He also added that though such an incident doesn’t have direct impact on apparel trade, the down sentiment of the market will have a negative impact.

This can also further increase issues regarding loan clearance and their regulation will be more stringent which is already very difficult. CFOs of few apparel manufacturing firms strongly believe this.

CA Rajesh Gupta of SAN Exports, Gurgaon is also of the same opinion and he adds that already public sector banks are taking much time to clear loans and their process is very stringent.

“We have heard some negative news about two more banks, and so we are planning to wind up our accounts from there and are suggesting the same to our employees also,” told a Jaipur-based apparel exporter who requested not to disclose his name.

Source :- https://in.apparelresources.com/

    
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