In view of the increase in payment defaults that is further leading to a credit crunch in the market, the Progressive Channel Association of Information Technology (PCAIT) has circulated a mail among its members warning them not to extend credit without proper financial planning and thorough information about the concerned party.

In addition, PCAIT is assisting another Delhi-based association Computer Media Dealers Association (CMDA) Delhi to lodge a complaint with the Economic Offences Wing (EOW) against a local partner who allegedly duped certain members of CMDA to the tune of Rs 50 lakh.

Sharing details about the mail, Saket Kapur, Secretary, PCAIT mentioned, “There have been several instances in the recent past when IT associations across the country informed PCAIT about fraud cases and problems that their members are facing. These problems were pertaining to lack of liquid cash in the market. So we resolved to circulate a mail warning our members to be cautious before give out goods on credit.”

Kapoor mentioned that the cost of doing business is going up as the rent for premises has increased by two to three times in the past. The cost of hiring manpower is also increasing.

“Inflationary pressure, rising cost of fuel and electricity is leading to a massive credit crunch in the IT market and there have been instances of fraud and payment defaults in the last few months,” he added. CMDA Delhi on the other hand is making every effort to support those members who have been allegedly duped.

Puneet Singhal, President, CMDA shared, “The payment default and credit crunch matter is worsening with every passing day and hence the association resolved to warn its members before extending credit to anyone in the industry. He further added that the vendors and the distributors would have to look into the situation and revise the targets so that there is less pressure on tier-2 partners. With rising inflation, hike in the lending rate of banks and shrinking margins, dealers are being left with no choice but to look at businesses other than IT.”

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