The Mangaluru Chapter of the Confederation of Indian Industry (CII) has urged the Union Finance Minister to intervene and issue directions to all banks to pass on the benefit of repo rate cut of 75 basis points to all MSME borrowers.

In a letter to Union Finance Minister Nirmala Sitharaman, Kalbavi Prakash Rao, Chairman of CII-Mangaluru, said the Reserve Bank of India (RBI) had announced a series of measures, including reduction in the key repo rate by 75 basis points, to make funds cheaper for industries. There were other relief measures too, such as providing moratorium on payment of EMIs and interest in order to tide over the liquidity crunch faced by the borrowers.

He said many of these relief measures announced by the RBI have not been passed on to the micro, small and medium enterprises (MSMEs) by the banks till date.

Stating that the repo rate cut of 75 basis points was certainly a welcome decision by the RBI to ensure making funds cheaper, he said industry would have benefited to a small extent with this, as the mounting working capital interest is making it unviable and unsustainable for most MSMEs in the absence of any revenue generation during the lockdown period.

He said banks are claiming that working capital limits were sanctioned to borrowers on a one-year fixed rate of interest, and would be reduced or passed on only during the next renewal of the limits. “This completely beats the intention of providing such a relief to the industries while banks conveniently profitfrom this repo rate cut,” he said.

Requesting the Union Finance Minister to intervene and issue directions to all banks to pass on this benefit of repo rate cut of 75 basis points to all the borrowers, he said this was a specific Covid-19 relief package. This is much-needed for the industries which are already reeling under severe losses on account of the Covid-19 pandemic, which has brought all economic activity to a halt for over 40 days, he added.

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