Direct banks to extend credit for paying penalties: Assocham

NEW DELHI: Industry body Assocham has requested the Reserve Bank of India to advise all commercial banks to extend domestic steel firms credit for payment of penalties due to de-allocation of coal blocks by the Supreme Court.

In a recent communication addressed to RBI Governor Raghuram Rajan, it has also said credit was also required for payment of upfront bid amounts for participation in the coal block bidding.

"The aggregation of challenged raw material availability owing to increased price trends, declining end products demand together with falling steel prices have been causing a severe blow to the domestic steel industry resulting in closure of numerous small and medium steel factories thereby putting operations and viability of larger ones in question," it said.

Stating that domestic steel industry has been passing through a very tough phase for past five years, it said the problem has aggravated due to cancellation of coal blocks.

Assocham has also suggested for refinancing of rupee term loan through foreign currency loans and also refinancing of external commercial borrowings (ECBs) through fresh ECBs.