The Associated Chambers of Commerce of India (Assocham) on Friday has sought an exemption for industries from the Rs 50,000 cap stipulated for current accounts by the government, saying thr amount was too low and should be upgraded.
Urging the government to consider lifting the cash withdrawal limit for corporate firms, Assocham said there is no scope of misuse as these transactions are properly recorded and audited.
Besides, they can be subject to scrutiny by any authority including tax departments, it said.
“The withdrawal limit of Rs 50,000 per week from current account is very less for industry. Therefore, it needs to be enhanced and the industry should not be subject to any limit because cash withdrawn by industry is duly recorded, audited and scrutinised by the government authorities such as Income Tax Department,” Assocham said in a letter to Finance Minister Arun Jaitley.
The industry lobby group has also requested the government to restructure bank loans repayment schedule for a large number of industries, especially the small scale sector, which has been hit hard by the ban on high value notes last month.
Assocham also fears that companies dependent on banks and financial institutions for finance would be hit by the limited cash availability.
In such a situation the borrowers, particularly the private limited companies and MSME sector, would default in loan repayments/interest payments, it said.
“Under this state of affair, the industry would require rescheduling of payments of loans as well as additional financial support to meet the liquidity requirement without any penal action,” Assocham said.
It also urged the Government to consider issuing cash cards to retail customers and small traders so that even a person without a bank account can carry transactions when cash is scant.
“Speedy distribution of cash is necessary so that people have confidence that sufficient cash is available in the system and there is no need of holding extra cash in hand.”
Day-to-day expenses like maintenance and repair, staff welfare, consumable items, loading and unloading are done mainly on cash and mostly paid to people in unorganised sector who do not accept cheques, it said adding, till the economy largely converts into a cashless one, the industry will face problem on a daily basis.
Assocham has also suggested that network of banks in rural areas should be spread so that every village has bank and ATMs.
(With inputs from PTI)