The Tiruppur Exporters’ Association (TEA) today requested Prime Minister Narendra Modi to extend the Reserve Bank of India’s three-month moratorium on payment of instalments on term loans as no industrial activity occurred till May 6. The moratorium was announced by finance minister Nirmala Sitharaman in on March 24 and will expire on May 31.
TEA president Raja M Shanmugham, in a letter to the prime minister, requested for extension of moratorium for another nine months for micro, small and medium enterprises (MSMEs) and another three to six months for non-MSMEs (not big corporations). TEA’s is concerned that the moratorium will expire on May 31 and repayment will commence by June 1, including the compounded interest calculated for the moratorium period. Leading global retail stores would reopen only from June and place orders gradually, that too in an incremental manner, he wrote. Without any activity, the MSMEs cannot repay the interest and principal, and TEA feels the revival of MSMEs will occur only after six months. A one-time ‘restructuring of debt’ option should also be made available to those in need, TEA said. This restructuring should not result in an asset downgrade, resulting in the units classified as non-performing assets; rather this should be announced as a ‘hand holding’ opportunity to the otherwise performing units stressed due to the Covid-19 crisis.
