FHRAI writes to FM, wants guarantee that On-Tap Liquidity Scheme will work
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FHRAI also proposed a longer repayment tenor and a redressal forum to address grievances of non-cooperation by banks and NBFCs of the scheme.
While the stimulus schemes announced by the government for the hospitality sector have been welcomed by everyone, there continue to be serious doubts about how well they work and how much they can actually help hospitality dig its way out of the current situation it is faced with—especially those who are not always able to borrow, like the larger more buoyant hospitality companies.
The FHRAI has appealed to the Union Finance Minister to consider making a few changes to make the On-Tap Liquidity Scheme “more impactful and effective” for the hospitality sector.
The hospitality body has requested an extension on the tenor of the scheme from the proposed 3 years to a more generous 5 to 10 years. Taking into consideration the lack of cash flow in the hospitality sector due to lockdowns and the reluctance on the part of the financial institutions to extend additional loans to hotel businesses, the federation wants the central government to give a 100 percent guarantee for such loans. Additionally, FHRAI also proposes a redressal forum to look into issues relating to the non-implementation of the schemes by banks.
“We are thankful to the Ministry of Finance for provisioning a separate liquidity window of INR 15,000 crore for the hospitality and tourism industry. However, the two successive waves of the pandemic and subsequent lockdowns have caused colossal damage and it would take nothing less than 5 years for the sector to return to normalcy. So, for reviving the sector, we request the Finance Ministry to extend the tenor of the scheme from 3 years to 5 to 10 years. Also, we strongly feel that the recently announced scheme would not be able to achieve the desired outcome without the Government’s backing of a 100 percent guarantee to banks and NBFCs,” said Gurbaxish Singh Kohli, Vice President, FHRAI.
“The hospitality industry has no business and many hotels and restaurants are already struggling under debt burden therefore banks and financial institutions are shying away from lending to such businesses as they are unwilling to take risks. Many relief measures of the Government have failed due to this unwillingness. 100 percent guarantee from the Government is the only tool by which such measures can be made effective. This is a very crucial stage for the hospitality industry and hence we request the Ministry to revisit some of the critical provisions in the schemes and make their implementation effective,” Kohli added.
