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Medium, small and micro enterprises (MSMEs) have requested the finance ministry to consider an extension of nine months in the moratorium on loan repayments. The three-month moratorium already on offer by financial institution ends on May 31.

Acknowledging the measures announced by Finance Minister Nirmala Sitharaman as part of the Rs 20 lakh crore stimulus package, industry associations and trade bodies have asked the Centre to consider pushing the moratorium period for another nine months, The Hindu BusinessLine reported.

Raja M Shanmugham, President, Tirupur Exporters’ Association (TEA) told the paper, “MSMEs are in no position to repay interest … the industry is in dire straits as activities had come to a halt before partially resumed … a revival could take place after six months if issues are addressed one-by-one.”

He pointed out that not only MSMEs but corporates are also facing a liquidity crisis and would need government support to endure the economic crisis.

Shanmugham added that a one-time debt restructuring should be allowed to those MSME units in need. “But this restructuring should not result in asset downgrade,” he added.

As part of the economic package, the Centre revised the definition of MSMEs so that more units can access initiatives, announced collateral-free automatic loans for MSMEs, provision of Rs 20,000 crore as subordinate debt, setting up of a Fund of Funds with a corpus of Rs 10,000 crore, it will provide e-market linkage for MSMEs, and MSME receivables from government and CPSEs to be released within 45 days.

Published On : 20-05-2020

Source : Money Control

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