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MSMEs ask for bigger support package

LN Revathy Coimbatore | Updated on April 17, 2020

While welcoming the lockdown, industry stakeholders voiced apprehension over what is in store for them after May 3.

Urging the government to address the concerns of the MSMEs in a more humane manner, representatives of 19 engineering industry associations jointly appealed for a change in the Debt-Service-Coverage Ratio for the MSMEs.

The drawing power of the units should not be assessed based on lower sales, receivables or lower stock, as sales has generally been depressed across segments; and neither should funds sanction be based on internal rating, as Covid-19 has brought almost all economic activity to a standstill, the statement said.

The Joint Council of Associations has appealed for fixing of working capital at 40 per cent of the turnover to infuse liquidity in the first place, at 6 per cent and with a holiday period of one year and for extending ad hoc additional credit (for Covid-19) of 25 per cent on existing working capital limits by all public and private banks.

The Council further pointed out that deferment of loan repayment by three months would not be sufficient. It has sought a one year moratorium for all bank loans, repayable over 10 years.

It has appealed for waiver of interest on all loans and cash credit for six months starting April 20, and nil interest on working capital and cash credit during the lockdown period and till the units resume operation.

Coimbatore has the largest concentration of MSMEs, said Codissia President Ramamurthy. The government should therefore consider to give ₹10-lakh crore to the MSMEs to tide over the present crisis, he said.

“Banks will need to trust the MSMEs, relax the rules to suit the present situation. We are seeking handholding support, but bankers’do not seem to understand our plight, the crux. They only go by the rule book, which is not realistic orpractical,” said Codissia President.

He further pointed out that there were quite a number of micro units that were not online. “Policy announcements should therefore be made after understanding the crux.”

The Council has sought a stimulus package for the MSMEs for loss of business during the lockdown period.

Reverting to payment of salary for April, 2020, Council representatives categorically stated that the MSMEs would not have the capacity or viability to pay the entire month’s salary without running their business.

“There is lots of unclaimed money lying with ESI and PF. What better time than now to utilise this insurance (ESI) money for payment of April salary?” the members asked, urging the government to consider making the payment out of such idle accounts.

Published on April 17, 2020

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