Govt & RBI appealed to extend MSME loan restructuring scheme to auto dealers

New Delhi, May 14 (KNN) Federation of Automobile Dealers Associations (FADA) has sought financial support to tide over the current COVID-19 situation which has forced shutting down of showrooms across the states.

According to media reports, on Thursday, FADA has dashed-off a letter to the Finance Ministry and Reserve bank of India (RBI) requesting them to extend benefits of loan restructuring, announced for MSMEs on May 5, to the auto dealers as well.

The automotive body also requested for an exemption on payment of Goods and Services Tax (GST) for the next three months, reduction in payment of provident fund for employees and reduction in interest rates on loans taken by dealers by 400 basis points.

FADA, which represents over 15,000 dealers having around 25,000 dealerships across the country, has also urged the central bank to direct public and private banks not to charge any interest on loans taken during the period of the lockdown in different states.

It further apprised RBI and Finance Ministry about the situation of auto dealers amid pandemic and mentioned that currently revenue for most of the dealers are nil but expenditure stands as it includes expenses like, wages, salaries, rent and electricity of showrooms, workshops and stockyards.

“RBI in its circular dated May 5 has already announced benefits to MSME’s by extending the benefits for restructuring existing loans without a downgrade in the asset classification. In this regard, the RBI should instruct banks to pass on the benefits of the above circular to all auto dealers who are registered under MSME and who approach the banks without any delay," said FADA in the letter, as per the media reports.

Many of the dealerships, being family-run enterprises, may not be able to survive by the time the second wave comes to an end, the FADA noted.

As per FADA, total vehicle registrations in India fell by 28 per cent to 11,85,374 units in April versus 16,49,678 units in March.