CODISSIA President requests Finance Minister to release additional 20 percent loan under Emergency Credit Line to tide over Covid-19 second wave

Coimbatore: CODISSIA President, V Ramesh Babu issued a press release requesting the Finance Minister to release an additional 20 percent loan under the Emergency Credit Line Guarantee (ECLG) scheme which was granted during the first wave of Covid-19.

"With the prevailing second wave of Covid-19 which has indirectly hit the MSME sector on the whole, we foresee near slow-down in the manufacturing activities of MSMEs during the next six months. The supply chain of MSME industries throughout India is badly affected which has direct bearing on the sales, leading to shortage of cash flow. This has resulted in non-payment of dues to the banks by the MSMEs which used to be done promptly, earlier.

The other factor for the severe cash crunch is due to the increase in all raw material prices to the tune of more than 70 percent. The first tranche of 20 percent loan sanctioned under the ECLG scheme got eroded due to the above facts. On this note, we request the Government to kindly consider the following points for the survival of MSMEs to emerge from this second wave of Covid-19. Moratorium period should also be extended for another six months for both term loan repayment and interest dues.

Initially we had asked for the 40 percent loan, out of which the Finance Minister was kind enough to sanction only 20 percent under the Emergency Credit Line Guarantee scheme. Now we are requesting for an additional 20 percent loan, under the ECLG scheme for the industries, on their working capital / cash credit limits, by banks and NBFCs with a repayment period of six years and with two years’ holiday period, to tide over the present economic crisis.

We are also requesting relaxation of NPA norms and extension of the same till March 31, 2022 due to the prevailing situation. The MSMEs are under tremendous pressure from the banks for repayment of dues. Considering the present pandemic situation, we request the intervention of the Finance Minister to stop banks from pressurizing MSMEs for dues, at this critical juncture, when business and cash flow is seriously affected due to the escalation of Covid-19 in most of the states in our country. We request favourable consideration of the Government for the survival of MSMEs," added the President of CODISSIA.