Retailers seek a 9-month loan moratorium from RBI, directive for banks
BENGALURU: (RAI), which includes companies like Future Group, Walmart India, Aditya Birla Fashion, has asked RBI Governor Shaktikanta Das to consider increasing the loan moratorium from 3 months to 9 months as they await demand. Consumers take much longer to stabilize while also sitting with large inventory due to the 21-day national close.
In a letter to the governor on Tuesday, reviewed by TOI, retailers also sought urgent intervention from the banking regulator to ensure banks implement the loan moratorium announced last week. RAI's letter to the governor said they are not yet ready to take any action on this front.
In addition to the extension of the 9-month loan moratorium, RAI also requested the RBI to order banks to lend ad-hoc working capital loans of 25% more than the current limits so that critical payments can be made. like wages and salaries. Among the list of submissions, he applied for a 4% interest grant for 9 months to reduce the interest burden.
“Most stores, except stores that sell essential foods and groceries, have been asked to mandatorily close across the country. Non-grocery/food retailers report an 80% to 100% reduction in sales. Almost 60% -70% of costs are fixed costs. This, coupled with low margins, leaves companies with limited flexibility. The current situation will lead to downscaling or widespread closure operations, ”said the letter to Das.
Offline retailers of nonessential products were already seeing a 40-60% drop in customer numbers in stores before closing as people began to restrict nonessential travel, according to industry officials. With the lockout, it has stopped for now, but a bigger concern for retailers is whether consumers prefer to save cash, rather than spending on nonessential items like fashion and lifestyle products.
Online retail in India, which is just a fraction of the overall retail market, is expected to experience a gross loss of sales of $ 1 billion during the 21-day close, but the forecast for annual growth has also been lowered. at around 5%, TOI reported in its Monday edition, citing data from Forrester, a market research firm.