New Delhi: The Retailers Association of India (RAI) has written to the Reserve Bank of India (RBI) seeking interest subvention of 4 per cent for nine months to reduce the burden of interest along with an extension of the moratorium on loan repayment till nine months. Also Read - RBI EMI Moratorium: What Way it is Going to Benefit You | Here's Everything You need To Know
Currently, as per the RBI’s directive, there is a moratorium on loan repayment for three months, till June 30. Also Read - RBI Announces Second Targeted Long Term Repo Operation, Extends Fixed Rate Reverse Repo
Citing the severe impact of the coronavirus crisis and the lockdown on the retail sector in a letter to the central bank, the industry body also suggested the RBI to mandate banks to lend ad-hoc working capital loans of 25 per cent more than current limits so that critical payments like salaries and wages can be made. “We request the RBI to consider additional relaxation measures to avoid NPA situations,” it said. Also Read - What is RBI's 3-Month Moratorium? Will EMI be Deducted From Your Account? Here Are Your Answers
The RAI urged the RBI to “extend the moratorium to 9 months from 3 months, as demand will take much longer to stabilise and the industry is sitting on huge inventory positions”.
“The industry is experiencing severe liquidity challenges which can lead to large scale unemployment, not just in retail but also in upstream industries that manufacture retail products. The cash inflow of the industry has come to a standstill, while the fixed operating costs remain intact,” it said.
The RAI also requested the Reserve Bank to recommend security market regulator SEBI to relax share pricing norms for QIP (Qualified Institutional Placement) and ‘Preferential Allotment’ to help companies raise capital, adding that significant relaxation is also required for ‘Rights Issues’.
“We request your urgent intervention to help retail industry survive impact of COVID-19 outbreak,” said the letter.
RAI further noted that the Indian retail industry has more than 1.5 crore retailers including both small and big, traditional and modern trade. The sector employs 4-5 crore Indians directly of which modern trade employs more than 60 lakh Indians equaling to almost 12 per cent of the total retail consumption of the country, it said.
“Most stores, except stores selling essential food and grocery, have been asked to mandatorily shut down across the country. Garments, saris, electronics, mobile phones, furniture, hardware etc. almost all stores are closed,” it said.
Also, non-grocery retailers are reporting 80-100 per cent reduction in sales, RAI CEO Kumar Rajagopalan said in the letter.
Talking to IANS recently, Rajagopalan had said that about 30 per cent of Indian retailers may be out of business in six months time if the government does not provide them support amidst the nation-wide lockdown.