Set up Digital Payments Promotion Board: CAIT

Source: The Hitavada      Date: 05 Jan 2017 09:35:45

Business Bureau,

With Prime Minister Narendra Modi laying great emphasis on adoption of digital payments in the country, the Confederation of All India Traders (CAIT) has suggested Government to constitute a Digital Payments Promotion Board. The Board should comprise senior Government officials, representatives of different verticals of non corporate sector including trading community and payment technology providers, banks and other financial institutions to intensify steps to encourage people to adopt digital payments.

Currently various agencies of 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, CAIT said.

Meanwhile, CAIT has hailed announcements made by the Prime Minister providing relaxations in banking facilities for small traders and industrialists and said that would promote easy lending by banks and would certainly bring informal economy to formal economy to a large extent. 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 B C Bhartia said that collateral security was one of the major deterrents for small merchants in availing funds from banks and financial institutions.

“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,” he said.
Huge cash would 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, 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,” he said. It has further demanded that RBI should also conduct audit of all such loan applications to ensure that PM’'s initiative is implemented.

Secretary General Praveen Khandelwal said that banks used to give cash credit limit for financing working capital upto 20 per cent of turnover.

“Now, PM has announced increase in this limit to 25 per cent of turnover. 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 will also encourage small traders to show maximum turnover in books of account through banking channel,” he noted.
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 loans despite all attempts and are being turned down by banks on one pretest or the other.

CAIT has urged Government to make MUDRA as an independent regulator and non banking finance companies (NBFCs), micro finance institutions,
trust and 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.