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FHRAI submits representation to FM granting ex-gratia payment

Wednesday, August 4, 2021, 10:00 Hrs  [IST]
HBI Staff | Hyderabad

India’s apex Hospitality Association - Federation of Hotel & Restaurant Associations of India (FHRAI) has submitted a representation to the Hon’ble Finance Minister – Smt. Nirmala Sitharaman requesting reintroduction of the scheme granting ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers from the Hospitality sector in view of the second wave of COVID19 pandemic. The FHRAI has stated that since the second wave of the pandemic Hospitality establishments have been operating under restrictions and in many places, closures all across the country. The tourism and hospitality sector has been facing a more severe economic turmoil than it has faced during the first wave. The Hospitality industry hopes that the payment against compounding interest, similar to the one granted during the first wave, will provide some relief to the sector in helping it survive the crises.

The scheme was formerly announced in October, last year which granted ex-gratia payment for six months to borrowers in specified loan accounts from 1st March to 31st August 2020. Borrowers with loan accounts having sanctioned limits and outstanding amounts not exceeding Rs.2 crore were eligible under the scheme.

“In States where the lockdown, either complete or partial was imposed, all the restaurants and bars were directed to shut down. As per the restrictions, only home delivery and takeaways from restaurants were allowed and in some States, even takeaways were prohibited. The interstate trade movement too came to a halt due to the imposition of restrictions or requirements of RTPCR tests. This discouraged a lot of travellers and resulted in a significant drop in occupancy across all hotels. We would like to request the Government to take cognizance of the disruptions caused to the tourism and hospitality sector over the last year and a half due to the pandemic. Under these circumstances, we request the Hon’ble FM to reintroduce the scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months to borrowers from the hospitality sector,” says Mr Gurbaxish Singh Kohli, Vice President, FHRAI.

The FHRAI has stated that 20 to 30 per cent of the hotels and restaurants in the country have permanently shut down due to financial losses, and over 20 per cent of hotels and restaurants have still not opened since the first lockdown which was imposed in March 2020. The remaining 50 per cent that may have re-opened are continuing to run in losses and revenues are below 30 per cent of the pre-COVID19 levels.

“Even when the lockdown was eased after the first wave, the WFH culture had gained traction and restaurants witnessed a sharp decline in lunch business. Restriction on office attendance, capacity, depressed sentiments, reduction in business travel and a general reduction in discretionary spending on leisure and social spending have cumulatively impacted the sector’s revenues. Then there are the restrictions, uncertainties and protocols imposed by the Government with respect to the issuance of tourist visas, quarantine norms and other COVID-19 protocols and more importantly, disruption of international commercial airline operations. All these factors have adversely affected the Hospitality sector. The industry has suffered maximum losses during the last sixteen months. The unprecedented second wave has created a strong ripple effect, disrupting the entire hospitality eco-system in the country and which will take many years to recover. It is therefore imperative that in view of the second wave and the resulting lockdowns that the Government must provide some relief to the Hospitality sector on payment compounding interests, similar to the one granted during the first wave of the pandemic,” concludes Kohli.


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