CAIT SUGGEST FORMATION OF DIGITAL PAYMENTS PROMOTION BOARD
ANNOUNCEMENTS BY PM HAS SET GUIDELINES FOR BUDGET
With Prime Minister laying great emphasis on adoption of digital payments in the Country, the Confederation of All India Traders (CAIT) has suggested the Government to constitute a Digital Payments Promotion Board comprising of senior government officials, representatives of different verticals of non corporate sector including trading community and payment technology providers, Banks & other financial institutions to intensify steps to encourage more and more people to adopt digital payments and to monitor digital payment landscape in the Country. Currently various organs of the Government are promoting digital payments in one way or the other. However, a comprehensive policy for promotion of digital payments is need of the hour and as such the proposed Board can act as a catalyst in ensuring faster adoption of electronic payments in the Country-said the CAIT.
Meanwhile, the CAIT has hailed announcements made by the Prime Minister Shri Narendra Modi providing relaxations in banking facilities for small traders and small industry and said that it shall promote easy lending by banks and will certainly bring informal economy to formal economy to a large extent-said the Confederation of All India Traders (CAIT). The initiative of Prime Minister would encourage small traders to borrow money through banking channels and would also encourage acceptance of payment through digital mode of payment. CAIT opined that PMs announcements has set tone of the Union Budget to be presented next month.
CAIT National President Mr B.C.Bhartia & Secretary General Mr. Praveen Khandelwal said that collateral security is one of the major deterrent for small merchants in availing funds from banks & financial institutions. The Credit Guarantee Corporation is used to guarantee loans to traders upto Rs 1 crore. Now, the Prime Minister has announced to increase this guarantee limit to Rs 2 crore which means that now smalll borrowers will not be required to give collateral security for credit limits upto Rs 2 crore. This will make small traders eligible for availing credit from banks. Huge cash will come as working capital in retail market. However, it is a fact that Banks are reluctant in advancing loans to small businesses for unknown reasons which is the major cause for low level lending by banks to non corporate sector. Therefore, the CAIT has demanded that Reserve Bank of India should check all the loans given to small traders to verify whether banks have taken collateral security from them or not. It has further demanded that RBI should also conduct audit of all such loan applications to ensure that PM’s initiative is implemented in letter and spirit.
Both Mr. Bhartia & Mr. Khandelwal also said that the banks used to give cash credit limit for financing working capital upto 20% of turnover. Now PM has announced increase in this limit to 25% of turn over. This will directly help in increase in working capital of small traders. Now they will be in better position to serve their customers by keeping sufficient stock and variety of range. It would also encourage small traders to show maximum turnover in Books of Account through banking channel.
The CAIT has also called for review of the working of MUDRA loans since large number of small traders for whom MUDRA was launched are unable to obtain Mudra loans despite all attempts and are being turned down by Banks on one pretest or the other. They have urged the Government to make MUDRA as an independent regulator and Non Banking Finance Companies, Micro Finance Institutions, Trust & Societies should be linked with MUDRA scheme and Banks should be directed to re-finance to such entities instead of awarding loans directly to the borrowers.
