New Delhi: Ahead of the Union Budget, industry body Assocham on Friday suggested a one-time rollover by banks to businesses reeling under severe liquidity stress to help them tide over the difficulties.
A rollover can be described as an extension or transfer of a debt or other financial arrangements.
Addressing a press conference here, Assocham top brass impressed upon the government, Reserve Bank and banks to ensure adequate liquidity into non-banking financial companies (NBFCs), provide investment incentives and cut corporate tax rates for the revival of economic growth and creation of new job opportunities.
"It could be a special window, one-time rollover or any other step. Rushing companies into NCLT because of liquidity shortages is not the solution," said Assocham President B K Goenka.
"We demand 100 percent depreciation in the first year of new investment. A five percent cut in the corporate tax will revive investment,” he added.
The chamber's vice president Niranjan Hiranandani said the situation is such that even if there is a short-term failure one is required to go into the insolvency process.
"We are suggesting that what was done in 2008 by the RBI to meet the crisis ... We think the crisis of today is even bigger than the crisis of 2008 so there is no reason why it should not again do the one-time rollover at the discretion of the banks, not everybody will be given a rollover but we need a one-time rollover by the crisis which is today,” he said.
Goenka said banks are flush with funds yet we have a crisis of liquidity.
“Post IL&FS, we have seen how the whole industry is almost on a standstill. I have never seen a scenario like this the way whole inventory has piled up in the automobile sector and the prime reason is liquidity,” the Assocham President said.
Hiranandani said he has suggested the creation of a stress fund to Niti Aayog for stalled housing and real estate projects as with not too large a corpus for short term, projects worth lakhs of crores of rupees would come to fruition, providing a big relief to the home buyers and revival of sentiment in the sector.
“We have through Assocham and NAREDCO where I am President have mentioned the need for the establishment of a stress fund to Niti Aayog and we believe that until a dress fund is created a solution will not be found to address this problem,” Hiranandani said. Besides, he said, there is a need to create a national rental housing policy which the chamber is proposing to the Government of India to come out quickly.
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Updated Date: Jun 28, 2019 17:39:15 IST