The Tiruppur Exorters’ Association (TEA) recently 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’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. Without any activity, the MSMEs cannot repay the interest and principal, and TEA feels the revival of MSMEs will occur only after six months.
TEA also demanded one-time ‘restructuring of debt’ option for those in need. 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 COVID19 crisis,