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Federation of Hotel & Restaurant Associations of India petitions for Special Credit Gurantee window for hospitality sector

Sunday, May 2, 2021, 13:14 Hrs  [IST]
HBI Staff | Hyderabad

The Federation of Hotel & Restaurant Associations of India (FHRAI) has submitted a representation requesting the Hon’ble Finance Minister - Smt. Nirmala Sitharaman to provide a ‘Special Credit Guarantee Window’ to the Hospitality sector under the ECLGS. Under these special provisions, the FHRAI has asked that the Government standardizes and aligns the tenures and the moratorium facilities floated under ECLGS 1.0, 2.0 and 3.0. It has also asked that the tenure of loan and moratorium facilities granted under the ECLGS 3.0 to be extended to loans already sanctioned under ECLGS 1.0 and 2.0 with retrospective effect.


“The sector is under tremendous financial stress due to the ongoing lockdown. Closure of many establishments in large numbers has been reported from all parts of the country along with massive job losses in the sector. Without adequate Government intervention, the situation will escalate further impacting lakhs of livelihoods along with large number of units pushed towards insolvencies and NPAs. The repayment schedule for loans taken under ECLGS 1.0 and 2.0 are likely to begin now, but unfortunately due to the ongoing lockdown many establishments do not have the cash flow to repay it. Therefore, it is imperative to align the tenure and moratorium facilities under ECLGS 1.0 and 2.0 with ECLGS 3.0. The sector was almost out of business or did not make any income for nearly 10 months. As of today the situation is even worse for the sector and establishments cannot even think of servicing of their loans in the near future. Hence we request that the tenor of loan and moratorium facilities granted under the ECLGS 3.0 be extended to loans already sanctioned under ECLGS 1.0 and 2.0 with retrospective effect,” says  Gurbaxish Singh Kohli, Vice President, FHRAI.

The Association has stated that the allocation of INR 54,000 Crores to travel, tourism and hospitality sector along with 27 other sectors under the ECLGS 2.0 was grossly inadequate and so, additional funds under ECLGS be provisioned specifically for the Hospitality sector.


“Government data has repeatedly highlighted that tourism, travel and hospitality sectors are the worst hit by the pandemic but no specific relief measures have been provided to uplift the sector from the colossal losses it suffered. Provisions under ECLGS 3.0 came very late and the allocation of INR 54,000 crores towards travel, tourism and hospitality sector clubbed with 27 other sectors under the ECLGS 2.0 was extremely inadequate. It is therefore imperative to make some additional provision of funds under the ECLGS to support the survival efforts of the tourism and hospitality sectors which have been continuously ignored in all previous financial packages,” says Surendra Kumar Jaiswal, Vice President, FHRAI.


The FHRAI has also requested the Government to consider eligible outstanding for tourism, travel and hospitality as an average of 11 months of FY 2020 beginning April 1st, 2019 till February 29th, 2020 as against the outstanding as of 29th February 2020 as proposed in the guidelines.


“October to March is traditionally the peak tourism season in India and thus credit outstanding levels are usually the lowest during February. Accordingly, under the ECLGS 3.0, 11 months’ average of the outstanding would enable a correct assessment of the Indian tourism, travel and hospitality enterprises as it would balance out the off-seasons and the peak seasons accordingly. We also request allowing moratorium on interest to enable drawdown under the proposed ECLGS 3.0 scheme,” concludes Kohli.

 
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