FHRAI Hosts Interactive Webinar With Mr Sanjeev Sanyal, Principal Economic Advisor, Ministry of Finance

Assures Hospitality Industry Of Action Against Erring Banks; Asks To Share Names & Instances Of Banks Working Against RBI’s Orders

Mumbai, Sept 07: The Apex body of Hotels and Restaurants in the country – Federation of Hotel & Restaurant Associations of India (FHRAI) recently held an interactive webinar with the Principal Economic Advisor, Ministry of Finance – Mr. Sanjeev Sanyal. The webinar lasted for just over an hour and focused on the issues faced by the Hospitality industry with respect to availing schemes announced by the Government and the Reserve Bank of India (RBI). Members of the FHRAI informed Mr. Sanyal the various issues ranging from banks’ resistance to offer the one-time restructuring of loans to de-activating accounts right after the end date of the moratorium period. Mr. Sanyal acknowledged hardships faced by the industry and assured the Government’s full support for its revival. He also acknowledged the limitations of banks but promised action against any which may have deliberately gone against the Government’s orders in extending the required support to the industry.

“We are in the midst of something very unprecedented. I completely sympathize with the hospitality industry and the repercussions it has had to face in the aftermath of the pandemic enforced lockdown. The Government is doing all that it can and continues to seek feedback from all sectors including this industry to make the system more efficient. We have, through the one-time loan restructuring option, offered to alleviate the financial burden on businesses. If for any reason, this provision is not working, then the Government wants to take your feedback and work on an action-plan to make it work. If this means that the banks, if for some reason have displayed inhibition in co-operating with the businesses trying to avail of the Government’s scheme, then we will take necessary action to rectify it,” says Mr Sanyal.

Mr Gurbaxish Singh Kohli, Vice President, FHRAI and President, Hotel and Restaurant Association of Western India (HRAWI); Mr Pradeep Shetty, Jt. Secretary of FHRAI and Vice President, HRAWI; Mr DVS Somaraju, Hon. Treasurer – FHRAI, Mr SP Jain, MD, Pride Hotels; Mr Surinder Jaiswal, President, HRANI; Mr Vivek Nair, CMD, Leela Hotels; and Mr Nirav Gandhi, MD, Express Hotels, were part of the FHRAI interactive meeting delegation.

“The Hospitality industry is one of the worst affected industries due to the lockdown. Firstly, we would like to thank the Government and the RBI for offering us the option of one-time loan restructuring. However, in the process of attempting to avail the same, we have met with certain obstacles. One of them being, the banks are procrastinating acting on the scheme because they are awaiting the K V Kamath report to come out. The other reason is that banks have a negative perception with regards to restructuring loans since they will have to provision for it separately,” says Mr Gurbaxish Singh Kohli.

Mr. Sanyal suggested that the Hospitality industry co-ordinate with other Associations and organizations that represent the MSME sector to identify similar issues and channelize resolutions through a common medium. He advised the Association to identify solutions within the existing systems instead of recommending an entire new scheme for the sector.

“One of the challenges faced by the hotels that are 10 to 15 years old is that they have no way to avail of the facility offered by the Government. Most of these establishments’ debts are paid off and have been using the working capital to meet expenses of operations. Presently, the banks decline loans to such hotels since these do not come under the priority sector. But we do need cash to manage everyday expenses and are hoping that the Government opens an Emergency Line of Credit for such hotels and restaurants,” says Mr Pradeep Shetty.

“Banks are generally pessimistic towards granting any loans to the Hospitality sector since tourism and hospitality is expected to remain subdued for the next 12 to 18 months. Additionally, our industry is classified by banks under the infrastructure sector which by default puts us in the red zone for financial institutions. So our sector does not get approved for loans not just because of prevailing circumstances but also because we have been negatively stereotyped by the financial institutions. The biggest collateral damage of this is to employment. The Hospitality industry employs close to 4 crore people and with no access to working capital, not only will hotels and restaurants have to shut but also a massive number of people will become jobless,” concludes Mr Kohli.

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