Coronavirus: CII urges government to help MSMEs

Industry body CII on Tuesday urged the government to relax collateral norms, extend moratorium, wage support and release government dues to provide relief to micro, small and medium enterprises (MSMEs).

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Confederation of Indian Industry (CII) in its recommendations, submitted to the finance ministry and various other government departments, sought expediting UK Sinha Committee recommended Fund of Funds for MSMEs, which has been under the consideration of the government, and augmenting the assets of MUDRA Bank.

"With limited resources, MSMEs do not have the capacity to withstand massive shocks like COVID-19. In addition, many MSMEs are an important part of larger supply chains. The health of these MSMEs have a bearing on the entire supply chain, including the large corporates. Therefore, special, immediate and substantive support measures are required to see the MSMEs through this crisis," CII Director General Chandrajit Banerjee said.

The CII recommendations focus primarily on increasing finance availability with relaxed collateral norms and extension of the RBI moratorium.

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It also called for additional additional working capital equivalent to April - June wage bill of the borrowers, backed by a government guarantee, at 4-5 per cent, with a refinance guarantee from the RBI.

The suggestions also include additional reconstruction term loans with a government guarantee on default, up to 20 per cent, and seek extension of the three-month moratorium period allowed by the RBI to six months for MSMEs.

The industry body also suggested that the Centre should increase the assets of Mudra Bank and other MSME-focused banks.

It urged the Centre to extend wage support by utilizing the ESIC funds under Rajiv Gandhi Shramik Kalyan Yojana, Atal Beemit Vyakti Kalyan Yojana to pay workers for the lockdown period, and clear all outstanding government dues to MSMEs, including payments for supply for goods and services to PSUs, GST refunds, various state and central government incentives.