The current pandemic lockdown and a slowing economy have led the MSME sector to see a huge drop in cash flow and revenue.
Small business expectations from RBI are mounting. Business owners expressing their fear over paying wages to their workers, GST compliances and EMI moratoriums.
In light of this, the RBI director in a news update pressed for bold initiatives to help revive the MSME sector.
Here is what the RBI is proposing vis a visa small business expectations from the RBI:
What are the small businesses expectations from RBI:
1. Loans & Moratoriums on EMI
Small businesses are not sure whether the 3-month moratorium on EMI payments will work because there is no income protection. Bankers have stated it would be an expensive proposition for any borrower to opt for a 3-month suspension, as announced by RBI.
MSMEs want the RBI to relax bad loan guidelines for classification of non-performing assets (NPA). Small businesses are hoping for an extension of the delinquency period from 90 days to 180 days.
2. Easier GST rules
Given how logistics industries have taken a massive hit due to the reduced movement and lockdown, supplies are less and items are not being shipped to customers. Small businesses are uncertain about paying GST right now and want the Government to extend the filing dates or eliminate them altogether.
In response to this, the Government announced last Tuesday that it is extending the filing of returns for the month of March, April and May 2020 and composition schemes to June 30th.
The Government also announced that companies which have less than 5 crore turnover need not pay interest, late fee or penalty.
3. Incentives for logistics businesses
The terribly-hit logistics business and exports industries are seeking help from their banks and the Government.
Businesses that are into exports could use some help with inventory management. MSME new logistics policy will help boost your business in the Union Budget 2020. Finance Minister Nirmala Sitharaman proposed building warehouses at block/taluk level.
If the Government could allot subsidised warehousing to exporters while figuring out the supply chain side of things, it could potentially help support the economy.
4. Working capital credit
Restaurants and manufacturing units are finding it difficult to pay their workers their salaries. Manufacturing units have stalled and there is no cash to continue daily operations In such a time. Small businesses are fighting hard to keep their workforce and generate some workflow during the lockdown.
MSMEs hope the Government provides working capital credit line to help keep them afloat till the pandemic is over.
The Government can push to promote the ‘Make in India’ scheme. It can help increase production and supply for MSMEs affected. Small businesses can also sell on the Government e-marketplace for immediate supplies needed by Government hospitals.
The Government is expected to keep a standby loan availability of Rs. 60,000 Crore to help businesses find steady ground during this time.
5. Every small business is stepping up today.
At Instamojo, we support over 1 million+ small businesses that are still fighting to stay afloat during the COVID-19 pandemic. That’s why we take extra care to get businesses up and running.
To help offline businesses connect to their online customers during the lockdown, we have introduced a faster KYC process and a special coupon code for free transactions.