We MSME were requesting the honourable Govt of India to stop our bleeding by providing us some sort of financial stimulus in this period economic recession compounded by COVID – 19.

The Govt of India took a positive measure by addressing the tax and statutory compliances which was immediately required due to financial year coming to an end and also some dealines required to be extended to help the MSME.

Then they adressed the much wanted relief for poorest of poor for food and cash as they need to fight their livelihood and COVID-19.

The much wanted oxygen for MSME announced by stream of measures below by RBI. We salute the govt of India in responding to the requirement of oxygen by MSME. The live example is our company today getting a approval of Rs 5 lakh as oxygen by way of working capital .which helped in complete paying our salary dues of February outstanding, due to COVID-19 most of our small clients closed their business and our receivable has got stuck up for 90-120 days.

1) RBI cuts massive 75 basis points in reporates to counter economic slowdown added by COVID -19 pandemic.The reverse reporate has been cut by 90 basis points through 4% which makes unattractive for banks to deposit funds with RBI and instant lend to productive sector.

2) Cash reserve ratio reduced by 100 basis point through 3% of net demand and time liabilities wiith effect from fortnight begining March 28 to the period of One year.

3) RBI Relief measures announced stands at 3.2% of GDP. 

4) In addition to this Bank of India has launched Emergency assistance credit lines for its corporates, MSME and retail customers whose cash flows are affected by COVID-19 Pandemic: 

• Personal loan borrowers are eligible for 3 times of last salary drawn max to Rs 5 Lakhs.
• Housing loan customers can avail additional loan upto 25% of market value of property, max 5 lakhs.
• Working capital limit additionally available 20% of existing to Corporate/ MSME borrowers

5) Three-month moratorium for all term loans from all financial institutions in view of Covid-19 outbreak and lockdown.

6) Subject to the above, banks can allow all customers reprieve from payment of EMI for three months without affecting their credit score.  The clarification given to this is lending firms shall frame board-approved policies to all eligible borrowers.  This means the individual banks can frame policies.  All commercial banks, rural banks, small finance banks, local area banks, cooperative banks, all India financial institutions, NBFC including housing finance companies and microfinance institutions can extend the moratorium.  This moratorium is not waiver but a deferment.

7) The RBI has recommended to reschedule the due dates by increasing the tenure by three months.  Interest shall continue to accrue on term loans during moratorium period.  Moratorium covers principal and interest that is total EMI.  This will be applicable to all loans outstanding as on March 1, 2020.  This includes agricultural term loans and crop loans besides retail loans.  Retail loans are home loans, personal loans, education loans, auto loans and any loans that have a fixed tenure.  It also includes consumer durable loans i.e. EMIs on mobiles, fridge, TV etc.

8) Even though credit cards are not term loans, RBI’s operational guidelines have said that credit card dues are also covered.  RBI guidelines does not address moratorium on loans on credit cards but as credit card dues are covered, it is likely that loan taken on credit cards may also be covered.  RBI has specifically mentioned retail loans.  Business loan may not qualify like a project loan for setting up a factory.

9) Deferment of interest payments on all working capital loans taken by business.  For this purpose, applicability will be on all working capital facilities outstanding as on March 1, 2020.  The accumulated interest for the period shall be paid after deferment period.  Moratorium or deferment will not be treated as change in terms and conditions of loan agreement and shall not result in downgrade of asset classification.

LETS US PRAY COVID-19 / RECESSION ENDS, MSME MAKES MORE MONEY