Small and medium businesses have urged the Modi government to extend the three-month moratorium on loan repayment till September 30.

The loan moratorium, which was announced by the RBI at its unscheduled monetary policymakers’ meet last week, was granted to help businesses tide over the economic impact of the coronavirus crisis. But a section of small businesses believe that instead of three months, the moratorium should be extended to six at the very least.

“Since the month of February, 2020, several sectors such as automobiles, steel, infrastructure and other ancillaries started showing the adverse effects of Covid-19. Prices have started to fall and the market scenario has turned adverse. Customers are reluctant to buy and sales have turned sluggish,” Calcutta Citizens’ Initiative said in a letter to the Prime Minister.

The industry has been struggling to meet their overhead costs — the wage bill, electricity costs, interest on cash credits and overdraft facilities.

The forum said the government ought to ensure that no banks declares an MSME account as a non-performing asset (NPA) during the financial year 2020-21.

It said the government should come up with a rescue package for these small businesses by reimbursing salary bills, minimum electricity bills and payment of interest to banks during the lockdown period.

They said that farmers in India had been given a bailout and it was now time the Centre stepped in to rescue small businesses.

The letter also said that banks should be asked to lend funds to the MSME at their marginal cost of funds-based lending rates, which is the minimum interest rate that a bank charges its borrowers.

The most creditworthy customers get loans at the MCLR rate — during such an unprecedented downturn.