Industrial associations in Coimbatore and Tiruppur districts have demanded extension of moratorium for repayment of loans.
Raja. M. Shanmugham said, in a press release recently, that as the financial situation of Tirupur knitwear garment units had not improved, the units were not in a position to repay the loan and interest. The moratorium should be extended till the end of this financial year, he said.
In the first quarter of the current financial year, the all-India knitwear exports clocked ₹ 5,355 crore against ₹ 13,570 crore recorded in the corresponding period of last year, with a negative growth of 60.54%.
MSME units that had credit exposure of more than ₹ 25 crore were deprived of receiving the Emergency Credit Line Fund now, Mr. Shanmugham said. By denying the benefit, the real intention of the government to extend crucial support to all MSMEs, to bailout the units from the impact of COVID-19 pandemic would not be realised. Hence, the RBI should relax the condition and permit even those MSMEs that had credit exposure of more than above ₹ 25 crore to get 2 0% of outstanding credit by keeping a maximum limit of ₹ 25 crore, he said.
The Coimbatore and Tiruppur District Micro and Cottage Entrepreneurs Association also demanded extension of the moratorium till the end of December this year. The Association said the MSME units were not in a position to repay the loan and interest now. They needed more time to resume the repayments.
Association president C. Sivakumar said, in a press release, that industries that had current account or no loan account should be given ₹1 lakh to ₹5 lakh collateral-free loan. Only industries with cash credit or over draft accounts received 20 % additional loan. The units that had current account or were without bank loans were in need of finance now and they had no option but to go to private money lenders. The banks said they could not extend support to these units as there was no such instruction. Hence, the RBI and the Central Government should issue the guidelines, he said.