The Hospitality and Tourism sectors on Friday welcomed the decision of the Reserve Bank of India (RBI) to open a separate liquidity window of Rs 15,000 crore for contact-intensive sectors like hotels and restaurants, tourism and aviation ancillary services, hit hard by the pandemic.
The Reserve Bank of India (RBI) announced a special ‘On-tap Liquidity Window’ of INR 15,000 cr for the Contact Intensive Sectors today to ease the liquidity and working capital pressure being faced by the travel, tourism, hospitality, aviation, transport sectors, and other related businesses in the country due to the Covid-19 pandemic.
Announcing the decision of the MPC, RBI Governor Shaktikanta Das has said that the special window is open till March 31, 2022 with tenors of up to three years at the repo rate.
Under the scheme, banks can provide fresh lending support to hotels and restaurants, travel agents, tour operators and adventure/heritage tourism facility providers, aviation ancillary service providers, ground handling and supply chain members and other services that include private bus operators, car repair services, rent-a-car service providers, event/conference organizers, spa clinics, and beauty parlours and salons.
By way of an incentive, banks will be permitted to park their surplus liquidity up to the size of the loan book created under this scheme with the Reserve Bank under the reverse repo window at a rate which is 25 bps lower than the repo rate or, termed in a different way, 40 bps higher than the reverse repo rate.
Further to the RBI policy announcement for support to the Hospitality and Tourism sectors, KB Kachru, Vice President of the Hotel Association of India said, “The liquidity window is a major relief to the hospitality sector which has been reeling under the devastating impact of the ongoing pandemic. Hotels, recognised as one of the most stressed sectors, have been requesting for such a relief to be provided urgently.”
KB Kachru went on to say, “It has given an additional lease of life to several hospitality establishments that are on the brink of closure. Ailing hotels will be able to save related jobs, lives and livelihoods. Hotel loans are lesser likely to become NPAs. The announcement of a separate liquidity window of Rs 15,000 crore for Contact-intensive Sectors will mitigate the adverse impact of the second wave of the pandemic and will certainly underpin the sector’s road to recovery.”
Welcoming the relief announcement for the Hospitality and Tourism Sectors, Ashish Gupta, Consulting CEO, FAITH (The Federation of Associations in Indian Tourism and Hospitality) said that they are happy that the RBI has heard their plea and taken a progressive decision to open a special window for the sector.
Said Ashish Gupta, “It’s unprecedented, to offer funds at the repo rate which is the lowest ever rate available in India.”
He added, “We have raised other issues as well in the meeting with the RBI team, and we hope those issues are also escalated further to the Finance Ministry and the government by the RBI,” he said.
Welcoming the announcement, FHRAI Vice President, Gurbaxish Singh Kohli said, “This is the first significant sign indicating that the government has taken note of the severe effect that the pandemic has had on the hospitality industry and the huge economic impact it will have on the sector as well as the nation.”
He added, “Infusing liquidity will provide the much-needed support to cash-strapped hospitality businesses without which the industry couldn’t have survived.”
However, the Federation of Hotel & Restaurant Associations of India (FHRAI) is of the view that the tenure should be for at least 5 years as a duration of 3 years is just not sufficient to recover from the financial turbulence that the industry is going through, Kohli said.
On the steps taken to give relief to the Hospitality and Tourism sectors, Indian Association of Tour Operators (IATO) President, Rajiv Mehra said, “We welcome the announcement by the RBI offering loans to the tourism and hospitality sector on easy terms and a lower rate of interest. Hope tour operators who have had almost zero income for past more than one year would get some succour out of it”.
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