The Retailers Association of India (RAI) on Thursday said the Reserve Bank of India’s (RBI) move to permit a one-time restructuring of loans amid the ongoing COVID-19 crisis will support the retail industry that has witnessed significant disruption over the past few months.
According to a PTI report: It said banks have made huge investments in the retail sector, and if the sector struggles to get back on its feet, a significant portion of that investment could turn into non-performing assets.
RAI also hoped that the new panel that looks into one-time restructuring would extend a helpful scheme to the industry.
“Permitting loan restructuring will support the retail industry that has witnessed significant disruption over the past few months. The current retail sales have been around 40 percent of last year,” Kumar Rajagopalan, CEO, RAI said in a statement.
He added that the restructuring will help retail industry get back on its feet to fight the economic crisis.
He further said, “We hope the new committee that looks into the one-time restructuring, headed by veteran banker K V Kamath, will extend a helpful scheme for loan restructuring to the retail industry.”
RAI said the coronavirus pandemic has resulted in a severe financial stress for the Indian retail industry. The closure of business during the lockdown resulted in the loss of revenue, which has rendered some retailers unable to pay salaries to their staff, it added.
The reluctance of banks, especially private banks, to come to their aid was unfortunate and hurt not only retailers but the banks themselves, it said.
In April, the RBI encouraged banks to lend more by cutting the reverse repo rate by 25 basis points, easing bad-loan rules, and granting a three-month moratorium for payment EMIs due between the March 1 and the May 31 this year.
More than half the retailers surveyed by RAI, however, had not got the moratorium from their banks, the retailers’ body said.