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FHRAI urges FM to bring back interest relief scheme for hospitality sector

07:33 PM Jul 31, 2021 | PTI

The hotel and restaurant players body has urged Finance Minister Nirmala Sitharaman to reintroduce a scheme granting ex-gratia payment of the difference between compound interest and simple interest for six months for the hospitality sector in the view of the second wave of the COVID-19 pandemic.

The Federation of Hotel and Restaurant Associations of India (FHRAI) on Saturday said it has submitted a representation to the finance minister urging for reintroduction of the scheme. Since the second wave of the pandemic, the hospitality establishments have been operating under restrictions and in many places, closures all across the country, FHRAI said in its representation.

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The tourism and hospitality sector has been facing a more severe economic turmoil than it has faced during the first wave and the industry urged 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 apex body added.

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

“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," FHRAI Vice President Gurbaxish Singh Kohli said.

This discouraged a lot of travellers and resulted in a significant drop in occupancy across all hotels, he said urging 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 finance minister 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,” he added.

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 reopened are continuing to run in losses and revenues are below 30 per cent of the pre-COVID-19 levels, it added.

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