FHRAI Requests Govt to Provide Special Window for Hospitality Under Emergency Credit Scheme

Industry Watch | May 4, 2021 | News

Federation of Hotel & Restaurant Associations of India (FHRAI), the apex association of hotels and restaurants in the country, has requested finance minister Nirmala Sitharaman to provide a special credit guarantee window to the hospitality sector under the Emergency Credit Line Guarantee Scheme (ECLGS), which is in its version 3.0.

Under these special provisions, the FHRAI has asked that the government standardise the tenors and moratorium floated under ECLGS 1.0, 2.0 and 3.0.

The government announced on 31 March this year that the collateral free loan guarantee scheme, announced as a part of the Atmanirbhar Bharat package, had been extended to 30 June, or until Rs. 3 lakh crore is disbursed.

FHRAI has also asked that the tenor of loan and moratorium facilities granted under the ECLGS 3.0 should be extended to loans already sanctioned under the earlier emergency schemes with retrospective effect.

The association has stated that the allocation of Rs.54,000 crores to travel, tourism and hospitality along with several other sectors under the ECLGS 2.0 was inadequate and hence, additional funds under ECLGS be provisioned specifically for the hospitality sector.

Gurbaxish Singh Kohli, Vice President, FHRAI, said, “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 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.”

Surendra Kumar Jaiswal, Vice President, FHRAI, said, “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 Rs.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.”

The ECLGS (1.0) was launched as part of a Rs 20 lakh crore Covid19 relief package called the Aatmanirbhar Bharat Abhiyan, to provide collateral-free, government-guaranteed loans to micro, small and medium enterprises (MSMEs) to mitigate the distress caused by the coronavirus-induced lockdown.

The scheme, originally valid till October 2020, was extended till November and then further till March 2021 with expanded scope to support 26 stressed sectors (including hotels-restaurants-tourism) identified by a committee, besides healthcare.

Repayment schedule for loans taken under ECLGS 1.0 and 2.0 are likely to begin, but due to ongoing lockdown many establishments do not have the cash flow to repay it, says body.

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