CMAI and Bank of India Sign MoU to Boost Financial Access for Garment MSMEs in India

The Clothing Manufacturers Association of India (CMAI) has joined hands with Bank of India (BoI) to provide tailor-made banking and credit solutions for India’s garment MSMEs. A new Memorandum of Understanding (MoU) signed between the two organisations promises easier loans, lower transaction costs, and exclusive employee benefits for thousands of small and medium garment businesses.

Partnership to Bridge the Credit Gap

India’s apparel industry employs millions and contributes significantly to exports and domestic consumption. Yet, small garment manufacturers often struggle to access formal finance. CMAI’s tie-up with a public sector bank aims to change that by offering customised financial products aligned with the sector’s working capital cycles and seasonal needs.

“Bank of India is proud to partner with CMAI and extend inclusive financial solutions to its members,” said Shampa Biswas, General Manager of BoI’s Government Business Department.

Ankur Gadia, Vice President of CMAI, added that the initiative will “reduce costs, improve credit access, and strengthen long-term stability for member businesses.”

What the MoU Offers

For Garment Businesses

• Collateral-free loans: Access to credit without pledging assets.
• Lower transaction costs: Free cash handling up to ₹20 lakh per day; full waiver on RTGS and NEFT charges.
• Custom banking packages: Specialised services for garment manufacturers, traders, and exporters.
• Insurance cover: Complimentary accidental and fire insurance for business operations.

For Employees of Member Units

• Zero-balance salary accounts: Removing the minimum balance requirement.
• Accidental and disability insurance up to ₹2 crore: Added safety net for workers.
• Education benefits: Assistance for employees’ children’s schooling.
• Discounted locker rentals and concessional loans: Helping workers build financial security.

CMAI said more schemes and enhancements may follow as the partnership evolves.

Benefits to the Garment MSME Sector

• Easier Working Capital: Small firms can finance inventory, raw material purchases, and seasonal orders without relying on costly informal credit.
• Improved Competitiveness: Access to affordable finance enables upgrades in machinery, compliance with global standards, and faster turnaround times.
• Employee Welfare: Insurance and education benefits can help improve retention and productivity in a sector known for high worker turnover.
• Lower Costs: Waivers on routine banking charges translate into direct savings.

Read: How to Start a Garment Manufacturing Business

Challenges Ahead

For the MoU to deliver on its promise, CMAI and BoI will need to:

• Spread awareness among thousands of small units, especially in semi-urban clusters like Tirupur, Ludhiana, and Surat.
• Simplify documentation and onboarding for businesses with limited banking history.
• Develop robust credit appraisal systems to manage collateral-free lending.
• Monitor implementation and ensure benefits reach genuine MSMEs and their employees.

Bigger Picture

This agreement stands out because it is industry-driven rather than a generic MSME scheme. CMAI is acting as a bridge between financial institutions and garment entrepreneurs, creating a model that other trade associations could replicate.

Given rising input costs, compliance demands, and global competition, such sector-specific credit partnerships can make Indian MSMEs more resilient and export-ready.

Next Steps

Experts suggest the following steps could strengthen the initiative:

• Conduct cluster-level workshops to educate members.
• Introduce digital onboarding and credit scoring based on supply chain data.
• Review performance periodically and refine offerings.
• Explore co-financing with government agencies for high-risk but promising units.

Conclusion

The CMAI–Bank of India MoU is more than just a banking deal; it is a strategic push for financial inclusion in one of India’s most labour-intensive industries. By lowering credit barriers, offering employee benefits, and customising banking services, the partnership can help thousands of garment MSMEs grow sustainably.

If implemented effectively, this collaboration could become a model for other industries—showing how trade bodies and banks can co-create sector-specific ecosystems to power India’s MSME growth story.