FHRAI wants special credit guarantee window for hospitality sector

The Federation of Hotel and Restaurant Associations of India (FHRAI) 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).

The industry body, in an official statement, said it has asked the government to standardize and align the tenure and the moratorium facilities floated under ECLGS 1.0, 2.0 and 3.0. The FHRAI has also asked that the tenure of the loan and moratorium facilities granted under the ECLGS 3.0 should be extended to loans already sanctioned under the earlier emergency credit line guarantee schemes with retrospective effect.

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

Kohli highlighted that the sector is under tremendous financial stress due to the ongoing lockdown. “Closure of our establishments in large numbers has been reported from all parts of the country along with massive job losses in the sector,” he said. “Without adequate government intervention, the situation will escalate further impacting lakhs of livelihoods along with a large number of units pushed towards insolvencies and non-performing assets (NPAs).”

Surendra Kumar Jaiswal, FHRAI VP, said it is 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.

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Asking for additional funds for the sector among other things, the FHRAI said allocation of Rs 54,000 crore to the 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.