Financial package demanded for organised retail sector

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Published: April 28, 2020 8:28:30 AM

The association said in the absence of stimulus from the Reserve Bank of India (RBI), more than 500 shopping centres are likely to be on the verge of bankruptcy.

Shopping Centres Association of India, Reserve Bank of India, RBI, RBI governor, Shaktikanta Das, financial package, coronavirus impact, retail sector and coronavirus, shopping centres in IndiaThe Shopping Centre industry covers more than 650 shopping centres.

The Shopping Centres Association of India (SCAI) has written to the RBI governor seeking a financial package for the organised retail sector that is reeling under the impact of Covid-19.

The association said in the absence of stimulus from the Reserve Bank of India (RBI), more than 500 shopping centres are likely to be on the verge of bankruptcy that may lead to the banking sector staring at non-performing assets (NPAs) of Rs 25,000 crore.

In its submission, the SCAI has urged financial institutions to consider a moratorium period in repayment of bank loans, interest, EMI without levy of any penalties. The association said the moratorium offered should be extended till March 31, 2021, at the minimum.

SCAI has also requested permission for a one-time loan restructuring with lower rates of interest for the sector.

“Banks are now writing to shopping centres/mall owners directing them to deposit rental payments even for the month of April in escrow accounts against lease rental discounting facility availed by the industry. Unable to deposit lease rentals, SCAI believes this will result in significant amount of defaults,” SCAI said in the letter to RBI governor on April 22.

The SCAI also sought a facilitating and forward-looking support provision of short-term financing options for a period of 6 to 12 months, at a lower interest rate to meet the increased working capital requirements.

The association further appealed that goods and services tax (GST) rebates be granted to offset the losses on account of and for the period of closure of business. The SCAI has requested to permit flexibility to deposit GST “as that needs to be deposited immediately upon raising of invoice, while corresponding payments are likely to be much delayed”.

Last month, the SCAI had submitted a representation to the Prime Minister’s Office (PMO) seeking his intervention in bailing out the sector from financial distress. The association had enlisted similar requests in its letter to the PMO.

The Shopping Centre industry covers more than 650 shopping centres of over 100,000 sq ft of which over 550 are owned by standalone developers. While revenue for the sector has come down to zero amidst the lockdown, it continues to incur fixed costs.

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