SMEs seek court intervention on many issues
An organisation representing COVID-19-hit small and medium scale Enterprise (SME) sector has sought redress from courts to direct the Central Bank to properly provide the government’s relief package via banks and financial institutions.
The National Trade Protection Council representing the SME sector has filed a writ petition at the Appeal Court against the Monetary Board of the Central Bank. The Appeal Court has granted ‘leave to proceed’ in the case on September 15 and it will be taken up for hearing tomorrow (October 11).
The Council is pleading for a direction to the Monetary Board to protect the local small and medium enterprises and entrepreneurs (who are the backbone of the country) without allowing it to collapse owing to irresponsible management of the economic and epidemic situation.
The writ petition seeks to ensure that the circulars issued by the Central Bank are duly executed and that further relief be granted due to the inadequacy of the concessions granted.
Many small and medium enterprises (SMEs) and entrepreneurs have mortgaged their properties and motor vehicles. However, the concessions granted have not been distributed systematically and the reliefs have not been properly regulated, the petitioners claimed.
The slowdown of economic activity caused by COVID- and related mobility restriction and lockdown measures to tackle the public health crisis has paralysed over 100,000 SMEs.
Most of these business enterprises are on the verge of collapse and the balance struggling to survive as the benefits of the government’s relief package have not filtered to them via the banks despite Central Bank directives.
Many otherwise sound business entities are facing severe liquidity constraints that led to solvency problems.
The Central Bank’s action to stop Parate executions and repossession of vehicles in the next six months for pandemic-affected borrowers will not settle the financial problems faced by SMEs, Mahendra Perera President of the National Trade Protection Council told the Business Times.
The debt moratorium given to affected enterprises which has been extended to June 2022 from October 1 2021 is not adequate to resume businesses crippled by the pandemic, he said adding that the government has to solve the current liquidity problem to resurrect the sector.