Tourism’s Game Changer: An Interview with BM Gupta, Executive Director, TFCI

February 7, 2019

TFCI has established itself as a leading financer for the Tourism and Hospitality sector, due to its in-depth experience that helps in capacity building of tourism facilities and infrastructure

 

 

Development financial institutions are relevant the world over. They enhance economic growth and routinely provide credit and a wide range of capacity-building programmes to large private corporations or government organisations, and in so doing, promote strategic sectors of the economy, such as agriculture, international trade, housing, tourism, infrastructure, among other sectors.

 

Tourism is a significant vehicle for economic progress. In India, the Tourism and Hospitality industry has emerged as one of the key drivers of growth among the services sector, contributing greatly to the country’s GDP as well as Foreign Exchange Earnings. In this context, the role of an all-India Financial Institution catering to the financial requirements of the Tourism Industry is crucial. The Tourism Finance Corporation of India (TFCI), established 29 years ago, has played an appreciable role in helping tourism grow.
Set up as an All India Financial Institution, pursuant to the recommendations of  the “National Committee on Tourism” under the aegis of the Planning Commission in 1988, TFCI’s main objective was to expedite the growth of tourism infrastructure in the country by providing a dedicated line of credit on a long-term basis to tourism related projects.  
TFCI is the only specialised institution in the country which exclusively funds tourism projects. For the last 29 years, it has successfully played the role of investment catalyst for the tourism sector. It has assisted more than 863 projects, leading to catalysing investments to the tune of Rs.30182 crore, thus helping in creating the required tourism infrastructure and having a direct bearing on the development of the industry. TFCI has been instrumental in the creation and addition of 50,350 hotel rooms in the country and contributed to generating direct employment to about 93,286 persons in tourism and other industries.
Moreover, up to March 31, 2018, this behemoth has cumulatively sanctioned assistance aggregating Rs.10352 crore with 85% exposure in the tourism sector, 3% exposure to infrastructure sector and 12% exposure to other sectors.
With its vast experience, TFCI has developed expertise and domain knowledge in financing a variety of tourism projects, such as hotels, luxury trains, resorts, health spas, golf courses, amusement/water parks etc. Besides, TFCI has been providing advisory services by way of conceptualisation of the project, feasibility/viability study and or loan syndication to facilitate new promoters in implementation of the project.
Taking the company forward is BM Gupta, Executive Director, TFCI, who spoke extensively to Today’s Traveller Coffee Table Book 2018, extolling the company’s initiatives in making tourism grow and making it into a game changer. Speaking about TFCI’s initiation and role, Gupta shares, “TFCI is the only institution in the country that exclusively funds tourism-based infrastructure projects and has, therefore, been able to play the role of an investment catalyst in this sector.”
Continuing, Gupta contrasts the period after the institution of TFCI, with the one preceding it, and informs that initially banks were reticent to sanction term lending – at that time (in the 1980s) banks were providing the working capital finance, and as such, financial institutions were dependent upon banks to subscribe to the bonds issue.
Therefore, financing a hotel was a tough proposition before TFCI came along, says Gupta: “A hotel project, which is one of the most capital intensive sectors in the industry, requires funds for a minimum of 10 to 15 years before it can become fully independent. However, banks were not in a position to finance the hotel for that long a period of time. Therefore, with a view to provide long-term funds for hotels and other projects of tourism, a need was felt for a dedicated financial institution.”
TFCI has the competitive edge over other financial institutions serving the tourism industry. It provides financial assistance for new projects in the tourism sector, their expansion, diversification, renovation and modernisation, as well as in the infrastructure sector, industrial/manufacturing sector, Real Estate sector, services sector and related activities, facilities and services as well as refinance to NBFCs/HFCs in the form of Rupee Loans (including short-term, medium-term and long-term loans), Corporate Loans, Subscription to equity/debentures, Refinancing of Loans, Takeover Financing, etc.
Another feather in TFCI’s cap is that it can proudly take credit for the creation of many successful home-grown brands and chains of hotels in the country. It has assisted entrepreneurs who have pioneered new product concepts in the hospitality sector, namely, Essel World; the first water sports complex at Goa; the first dolphinarium (later on, the sea-lion show) near Chennai; Indian Railways’ ultra-luxurious ‘Palace on Wheels;’ the first meditation spa resort, ‘Ananda in the Himalayas,’ at Narendranagar, Uttarakhand; the restoration and conversion of royal palaces into heritage hotels, notably Umaid Bhawan Palace, Devigarh Fort, Khimsar Fort (Rajasthan) and Jehan Numa Palace (Bhopal).
Gupta points out that it has not always been a bed of roses for TFCI. But, according to him, the present government has piqued the interest of the world community towards India and various companies are interested in investing in India. However, the infrastructure in the country has to be brought up to par. “Building a hotel near the airport makes no difference unless the infrastructure around is also developed,” Gupta rightly conjectures, ending on a positive note, “With proper development of tourism infrastructure, the industry is sure to flourish in the long run.”

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