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Retailers seem to have received insufficient financial support from banks, especially private players, to tide over the impact of the Covid-19 pandemic, according to a survey released by Retailers Association of India (RAI).
More than half of the retailers (52 per cent) that participated in RAI's survey said, they had not received the moratorium from their banks. " Furthermore, while 54 percent of the respondents asked their respective banks for additional working capital limit (Covid-19 limit), only 15 percent got it. PSU banks rejected around 28 percent of all loan requests, while private banks sanctioned less than 10 percent," RAI said in a statement. Over 300 retailers participated in this survey.
The RBI, in April, had encouraged banks to lend more by cutting the reverse repo rate by 25 basis points, easing bad-loan rules, and granting a three-month moratorium for payment EMIs due between the 1st of March and the 31st of May 2020.
The survey also suggested that retailers had comparatively better experience with PSU banks than private banks. About 52 percent of respondents said they were satisfied with the financial support and services extended by PSU banks during Covid-19, almost an equal percentage are dissatisfied with private banks.
In a statement, Kumar Rajagopalan, CEO, Retailers Association of India said, “ Retailers selling both essential and non-essential items have reported a 40 percent and 100 percent drop in sales, respectively, due to the Covid-19 situation. The closure of business over the past couple of months has resulted in loss of revenue, which has rendered some of them unable to pay salaries to their staff. "
"The reluctance of banks, especially private banks, to come to their aid is unfortunate, and could hurt not only retailers but the banks themselves. Banks have made huge investments in the retail sector, and if the sector struggles to get back on its feet, a significant portion of that investment could turn into non-performing assets," he added.
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