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All Members of FHRAI

CC:   Executive Committee Members of FHRAI
         All Regional Associations

Sub:- Monetary Policy Committee Recommendations of RBI - 6th  August 2020

Dear Member,

Greetings from FHRAI!

RBI Governor Shri Shaktikanta Das recently announced the Monetary Policy Committee recommendations to bolster the economic fight of the country against Covid-19.

We are very delighted to share that some of the key recommendations of FHRAI have been accepted by RBI and as a result of our strenuous policy advocacy efforts for the last five months, the following points have been made part of the monetary policy of RBI.

•          Stressed MSME borrowers will be eligible for restructuring their debt under the existing framework provided their accounts were standard as of March 1, 2020.  This restructuring will have to be implemented by March 31, 2021.

•          A window under the June 7 stressed asset resolution framework will be provided which will enable lenders to implement a resolution plan, without a change in ownership.

The disruptions caused by COVID-19 have led to heightened financial stress for borrowers across the board. A large number of firms that otherwise maintain a good track record under existing promoters face the challenge of their debt burden becoming disproportionate, relative to their cash flow generation abilities. This can potentially impact their long-term viability and pose significant financial stability risks if it becomes wide-spread. Accordingly, it has been decided to provide a window under the June 7th Prudential Framework to enable lenders to implement a resolution plan in respect of eligible corporate exposures - without change in ownership - as well as personal loans, while classifying such exposures as standard assets, subject to specified conditions.

•          The central bank will amend the priority sector lending guidelines to remove regional disparity.

Another very significant part of the policy announcement is that RBI will constitute a committee under Shri K V Kamath to recommend sector level loan resolution norms based upon sectors which are most impacted.

Another demand of FHRAI has also been acknowledged by RBI and the monetary policy states that the cumulative reduction of 250 basis points is working its way through the economy, lowering interest rates in money, bond and credit markets, and narrowing down spreads. Given the uncertainty surrounding the inflation outlook and extremely weak state of the economy in the midst of an unprecedented shock from the ongoing pandemic, the MPC decided to keep the policy rate on hold, while remaining watchful for a durable reduction in inflation to use available space to support the revival of the economy.

FHRAI welcomes these steps taken by RBI and we will continue to engage with RBI and the newly constituted KV Kamath Committee to seek the support of government to the hospitality sector to survive and thereafter revive, out of this once in a century crisis. 

A copy of the statement of RBI Governor is enclosed for your ready reference.

With kind regards,

Gurbaxish Singh Kohli
Vice President
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The Federation of Hotel & Restaurant Associations of India
Regd. Off.: B-82, 8th Floor, Himalaya House, 23 K.G. Marg, New Delhi - 110 001
Tel.: 011-40780780, Email: fhrai@fhrai.com, Website: www.fhrai.com