The Joint Council Associations of Coimbatore (consisting of CODISSIA, ICCIC, SIEMA, COINDIA, TACT and many associations) held a meeting on Friday to discuss the challenges the MSME sector has faced in this lockdown period.
The major problem for MSMEs is that their bank accounts have zero balance. They have no drawing powers. The case of many companies right now is that they are overdrawn as on March. They have no facility to provide wages for workers. MSMEs have made use of the minimum balance they had to give wages for March. They don’t have fund to pay wages for April.
Govt of India has instructed banks to give loans to MSMEs but it is left to the discretion of the banks to give these loans. Banks have said that they will give loans based on the ratings of a company. Due to this model, the companies that are in need of loans don’t get them while other companies (that would not need loan) are being offered support as they have credit balances.
Micro, Small and Medium level companies don’t even have funds in hands. They have a dearth of working capital. They normally supply products for big companies, and payments from their buyers are yet to arrive. MSMEs have no funds to give wages to workers due to this standstill situation caused by COVID-19.
MSMEs are requesting banks; that instead of looking at the merits of the cases, if the companies’ working unit, monthly turnover, salary commitment are considered and provided assistance, it will help MSMEs to survive this grave time of crisis.
As this period is a non-working period, it was also suggested that all due-timelines (banks and Govt) which were set as 31.3.2020 should be moved to 31.5.2020 and these times should be made as an interest-free period, if every operation commences on May 3rd.
The Joint Council suggested that the Government should come forward to give April –May salaries for MSME Sector through ESI Act 1914.Many funds –ESI and Provident Fund remain unclaimed. These funds could help in giving salaries to employees.