West Bengal’s Jute Industry Hit By Fund Crunch As Banks Set Stringent Credit Norms
The jute industry in West Bengal is facing difficulties due to dearth of working capital as banks have allegedly tightened lending standards for the sector, officials said.
The lenders have been seeking "clear land papers" from mill owners for extending loans, they said. At present, three major jute mills are closed due to working capital crunch, industry sources said.
"Lack of banking credit has hit several jute mills in the state. Mill owners are not getting adequate credit to run their businesses. Banks make lending norms more stringent for land titles, which is used as collateral," a jute mill promoter told Press Trust of India on the condition of annomity.
Workers of closed Weaverly Jute Mills at Shyamnagar in North 24 Parganas district allegedly ransacked the office of the unit and torched two vehicles after the management put up a notice to continue the suspension of work on Friday.
The work at the mill was suspended on Jan. 29 as promoters of the company witnessed "a slowdown in business" and were struggling with "fund crunch", sources said.
"Following the alleged fraud perpetrated by billionaire jeweller Nirav Modi and Mehul Choksi, banks have become extra cautious. They are seeking clear land papers before sanctioning loans," industry sources said.
Raghavendra Gupta, chairman of Indian Jute Mills Association, said access to bank credit against the land title is a challenge, though the West Bengal government had brought in a legislation and subsequently, amended a relevent law to solve the problem.
"Currently, mill lands belong to the state and had been given to the millers for a specific purpose. A legislation and the amended law enabled the government to offer land to mill owners for a lease of 99 years to solve this perennial title issue," Gupta said, hoping that the mills will be able to supply monthly 3 lakh bales of jute bags to the government.