The Retailers Association of India (RAI) has written to the central bank seeking additional relaxations including an extension of loan moratorium from 3 months to 9 months to avoid a non-performing asset situation amidst the COVID-19 crisis.
RAI, which represents 13,667 large and small retailers, in its letter said that due to the spread of COVID-19, the cash inflow of the industry has come to a standstill, and the retail industry needs urgent intervention to survive the impact.
“Extend the moratorium to 9 months from 3 months, as demand will take much longer to stabilize and the industry is sitting on huge inventory positions,” said Kumar Rajagopalan, the CEO of RAI in the letter.
“With most stores being shut, retailers have zero revenue. They still have to pay overheads such as salaries, electricity and rentals. We request urgent intervention to help the retail industry survive the impact of COVID-19 outbreak,” he added.
The letter also sought extension of moratorium to non-fund sources of capital like bills discounting and letters of credit.
RAI further asked the RBI to ask banks to lend ad-hoc working capital loans of 25% more than current limits so that critical payments like salaries and wages can be made.
Earlier on March 27, RBI Governor Shaktikanta Das had announced a three-month moratorium on repayment of term loans and interest on working capital.
The deferment will be applicable on payment of instalments in respect of all term loans outstanding and working capital facilities sanctioned in the form of cash credit outstanding as on March 1, 2020, the RBI had said.
RAI also requested RBI to direct all banks for implementation of the moratorium.
“Banks continue to debit loan instalments stating that final decision on moratorium is pending,” said the RAI.
Due to imposed lockdown, the businesses in India have been facing disruption as their income and revenues are hit, increasing the cash flow pressure.
In India, total cases of COVID-19 reportedly rose to 1397 on Tuesday, including 35 people who died.