SME Times News Bureau | 04 Apr, 2020
The Confederation of Indian Industry (CII) has announced
setting up of a CII COVID Rehabilitation and Relief Fund (CRR) to assist small
enterprises or MSME in rehabilitation.
This decision was taken by a CII Forum on Covid-19 which is
leading industry response measures to the Coronavirus pandemic.
Following widespread discussions with MSME members across the country, specific
measures have been suggested by CII to curtail the impact of Coronavirus on the
MSME sector.
“Multiple actions need to be taken on extension of bank
loans, a special fund, steps regarding filing of GST and improving welfare of
workers. CII stands ready to support MSME sector in this hour of need through
the CII COVID Rehabilitation and Relief Fund,” stated Shreekant Somany,
Chairman, CII National Council on MSME.
With MSME facing a cash crunch, CII requested for additional ad-hoc sanction of
working capital to the tune of 25% of sanctioned limit as a relief measure. The
industry body suggested deferment of EMIs and interest rate on working capital
as well.
Setting up of a special MSME Factoring fund to enable MSMEs
to discount their bills to approved retailers in 15 days and permit retailers
to pay in 120 days would help in faster realization, said CII.
Creation of a corpus by the Government to help MSMEs tide over the crisis would
help them to pay wages, according to CII.
Extension of NPA norms in genuine cases to 150 days from the
present 90 days and if required by industry, ad-hoc limits to an extent of 25%
of sanctioned limits may be allowed by banks on SOS basis to overcome temporary
liquidity crunch, would also provide temporary relief, said CII.
Measures for improving welfare of the MSME workers during the temporary
shutdown period are required as well, said CII. Some of these could include
supporting laid off workers during the crisis period, handling the statutory
compliance of compensating workers in case of shutdown and exploring insurance
cover options through the Employee State Insurance Corporation (ESIC),
among others.
Other measures such as, extension of period for declaring NPAs by MSMEs,
allowing roll over of terms loans and implementation of moratorium on EMIs for
industrial loans and faster tax refunds, allowing banks to extend credit limit
for MSMEs by 20% at branch level, among others could significantly ease
liquidity and other pressures on the sector and help the sector cope with the
current crisis, said CII.
It has been further proposed by CII that the Government should draw up
contingency plans for three periods – Till 31 March; for Next 2 months till 31
May and then for Next 2 months till 31 July. There should be close monitoring
of Payment Delays by CPSUs to MSMEs through a portal for complaints and
necessary funds are provided and utilized for this purpose should be ensured,
banks should be allowed to extend existing Credit Limits for MSMEs by 20 % at
Branch Level.
Relief should be provided so that credit rating of Brands
and Retailers is not adversely affected due to delays in repayment of bank
loans, interest, EMI, etc together with ensuring that no punitive action is
taken by NCLT for delays of repayments etc. till 31st December 2020, added CII.
CII has 67% of its membership as SME and works closely with the Ministry of
MSME. CII organized a special virtual meeting for its SME members on assessing
the impact of Covid-19 in their businesses and also bring out suggestions to
mitigate the adverse impact.
Over 100 MSME members from across India participated
representing sectors of auto components, light engineering, forging,
electronics, ceramics, construction equipment, décor solutions, financial
services, pharmaceuticals, chemicals, IT & ITeS, etc.
The Micro, Small and Medium Enterprises (MSME) sector is one of the most
severely affected sectors, amidst the ongoing Coronavirus (Covid-19) crisis.
Many steps to curtail the outbreak such as travel bans,
closure of malls, theatres and educational institutions have led to widespread
disruptions in economic activity, which in turn has hampered the business
operations of the MSMEs.