The Centre may rework the textile restructuring package, aiming to reduce the interest rate to 8 per cent in the wake of concerns expressed by banks and financial institutions over the viability of the scheme without any government assistance.

Officials said, after a recent meeting with representatives from ICICI Bank, Industrial Development Bank of India and the State Bank of India, bankers feared that mere debt-swap through external commercial borrowings might not be feasible.

Besides, officials said, the financial position of institutions like IFCI Ltd would not permit them to raise ECBs.

They added that following the meeting, banks and institutions had sought time till January 31 to implement the scheme failing which the textile ministry was planning to ask the finance ministry to rework the scheme with part funding through budgetary support.

According to the original plan chalked out by the government, banks and institutions were to reduce interest rates on loans to 12 per cent and the Centre was to chip in with assistance to ensure that loans were made available to textile companies at 8 per cent interest rate.

Bankers, on their part, were of the opinion that the more profitable and larger textiles units were already getting funds at 8-10 per cent interest rate and did not require the package. The package would largely benefit medium scale units.

The government-announced scheme entails the reduction of interest rates to viable textile units from the present level of around 16 per cent to 8 per cent.