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FHRAI demands loan moratorium for pandemic-hit hospitality sector

ZT Web Desk

New Delhi, Jan 18: Hospitality industry body FHRAI on Tuesday said it has asked Finance Minister Nirmala Sitharaman to consider a moratorium for loans taken by players in the sector and a special resolution framework for restructuring of loans as part of immediate measures to support the pandemic-battered industry.

In a representation submitted to the finance minister, the Federation of Hotel & Restaurant Associations of India (FHRAI) also sought a moratorium extension of a minimum one year for loans availed under Emergency Credit Line Guarantee Scheme (ECLGS) citing the successive waves and continued disruptions have created a volatile economic environment in the sector, making survival the key focus.

Also, FHRAI said it has requested Sitharaman for working capital support with a guarantee from the Centre to banks and NBFCs.

It also demanded that Rs 60,000 crore loan guarantee scheme for the COVID-affected sector be notified with immediate effect and that there should be direct benefit transfer of basic pay to employees of the hospitality sector.

The demands of the sector come ahead of Union Budget 2022-23, which will be presented in Parliament on February 1.

Commenting on the demands of the sector, FHRAI Vice-President Gurbaxish Singh Kohli said,”We are presently in the midst of the third wave and the industry just will not be able to sustain another storm. In anticipation of the extent of losses and to merely be able to survive the repercussions of the third wave, we request the FM finance minister) to immediately announce special measures for our sector.”

As the sector was inoperative due to restrictions, he said it is not in a position to repay loans already taken.

“Our foremost request is for a moratorium of minimum one year for repayment of loans along with interest for the hospitality industry. In addition to this, we request that in view of the unparalleled situation of the tourism and hospitality sector, another round of resolution framework be announced for the sector for restructuring of its loans,” Kohli added.

The hospitality industry has been severely impacted ever since the pandemic hit the country in early 2020 with the first lockdown and restrictions putting the sector at a standstill for almost eight months, he said, adding while the industry was hoping for some revival post-November 2020, the second wave in April-May 2021 totally deflated the business and the hope of the industry.

In its representation, FHRAI said the financial loss to the industry from the preceding two waves caused around 30 per cent of hotels and restaurants to shut down permanently.

“The remaining establishments continue to run in losses even today. The hospitality industry has reported losses of a whopping sum of Rs 1.40 lakh crore and around 50 million jobs were lost due to the pandemic,” it said.

Under the present circumstances, Kohli said,”We request the FM to provide the industry a moratorium extension of minimum one year for the loans taken under the ECLG scheme.”

The repayment schedule for the loans taken under ECLGS 1.0 and 2.0 have started in most of the cases but unfortunately, those establishments do not have the cash flow to repay the loans due to the bad state of affairs in the sector, he added.

Stating that there wasn’t any business or income for the sector for almost ten months in the previous year, Kohli said,”The present surge in cases has made conditions even worse for the sector.”

Seeking government support for working capital requirements of the hospitality sector, FHRAI stressed on the need for a long-term funding scheme with a low-interest rate and a guarantee from the central government to banks and NBFCs.

The industry body further said it has once again requested to notify the Rs 60,000 crore loan guarantee scheme with 100 per cent government guarantee and long-term repayment options “with immediate effect as an effective measure to address the colossal damages suffered by the tourism and hospitality sector in the country”.

Calling for government support for employees in the sector, Kohli said,”A direct salary transfer will support the livelihoods of crores of people till the time normalcy is restored in the sector. Since trained and quality manpower has a predominant role in the tourism and hospitality sector, this support is very vital to restart and revive the Indian tourism.

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