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Trade bodies disappointed with RBI measures to fight Covid-19 impact

Trade bodies disappointed with RBI measures to fight Covid-19 impact

The Consortium of Indian Associations (CIA), a group of over 30 trade bodies and regional small and medium scale industry associations expressed disappointment over RBI's decision to not waive off or reduce the 'interest' component of loans

The Consortium of Indian Associations (CIA), a group of over 30 trade bodies and regional small and medium scale industry associations, has expressed disappointment over the relief measures announced for the Covid-hit businesses by the Reserve Bank of India (RBI) today.  

"The benefits of the announcements - the Resolution Framework 2.0 for COVID Related Stressed Assets of Individuals, Small Businesses and MSMEs, Lending by Small Finance Banks (SFBs) to MFIs for on-lending to be classified as Priority Sector Lending, Credit to MSME Entrepreneurs, Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs) will not benefit the MSMEs and self employed who are badly affected by COVID 1 and COVID 2 and are having cash flow issues and bleak  unpredictable future," K.E.Raghunathan, convenor, CIA said.  

"The alternative to moratorium through loan restructuring for accounts which are 'standard' as on March 31, 2021, will deprive many self employed and micro/small enterprises to avail this benefit. Plenty of enterprises engaged in Tourism, Hospitality, Gym, Salons, SPAs, Transport, Tour operators, Automobile,Service sector, Restaurants, Hotels and many others, all have been left out," he said, while adding their businesses have been impacted "beyond imagination".

According to Raghunathan, what is required is emergency relief, not announcements of restructuring which are time consuming and will lead to chaotic implementation. Also, the relief will be offered at the discretion of the banks.

The organisation expressed disappointment over RBI's decision to not waive off or reduce the 'interest' component of loans. It termed disappointing the lack of support to exporters who extend more credits or startups which have no existing loans. "Priority sector category and higher allocation of additional loans alone can't be a solution at this moment. What is required is comfort of reduction in cost of finance, means of increasing profits and demand, relief from EMI payments to save funds for emergency needs to fight Covid," Raghunathan said.

In a special announcement, RBI Governor Shaktikanta Das spelt out a slew of measures as a comprehensive targeted policy response to the economic disruption caused by the second wave of Covid-19.   

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