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Feedback on Inadequate Relief Measures by the Government for the Hospitality Sector

11 th Jan 2021

The Managing Directors/CEO's/Owners/Director/Partners/General Managers
All Members of FHRAI

CC:   Executive Committee Members of FHRAI
         All Regional Associations

Sub: Feedback on Inadequate Relief Measures by the Government for the Hospitality Sector

Dear Member,

Greetings from FHRAI!

As you are aware, FHRAI has been tirelessly advocating with the Government for some hospitality specific relief and the same has been taken up strongly during our interactions with senior Ministers and Secretaries of various departments as well as through our numerous representations sent across to the Government during the last 9 months since the Covid -19 outbreak.

At the same time, it has been found that the Government was not amenable to provide sector specific relief to the hospitality industry being the worst hit of the pandemic. In the submissions in the courts, the Central Government has been claiming to provide the following specific relief measures for the hospitality sector in the country.

A.     Emergency Credit-Linked Guarantee Scheme (ECLGS)

The Government of India granted Rs. 3 lakh crores to provide additional credit at lower rate of interest, with 100% government guarantee and no fresh collateral. The scheme has been extended with higher financial limits to twenty-seven COVID-19 impacted sectors including restaurant and hotel sectors.

B.     Rs 20,000 Crore Subordinate Debt

The Central Government granted Rs 20,000 crore subordinate debt with partial credit guarantee for over two lakhs stressed MSME units including hospitality sector.

C.     Debt Resolution Plan for MSMEs and other Accounts Stressed due to Covid -19

As explained in the Affidavit dated 31.8.2020 of Union of India, the banks are fully empowered to resolve covid-19 related stress and customise reliefs to individual borrowers through grant of various concessions / reliefs etc. The RBI has, however, directed all lenders to have a mechanism through the Board approved policies of each lender within the overall framework decided by the RBI vide circular dated 6th August, 2020 and 7th September, 2020.

D.      Downgrading of NPAs

As per the submission of the Government, adequate safeguards have been made to protect the loan accounts from possible downgrading from Standard to NPAs, through invocation of restructuring. As informed, any account becoming Nonperforming even due to the bank's or any other delay, need not suffer from being labelled as NPA.

E.    Downgrade of Credit Rating

As per the submission of the Government, the Securities and Exchange Board of India (SEBI) issued a circular on 30th March 2020 providing for relaxation from recognition of default due to the moratorium. On 31st August 2020, it has further specified that in cases of restructuring, the same may not be considered a default by rating agencies.

As all of us are aware, despite the toll claims by the government, these relief measures could not bring any respite to the hospitality sector which is waging a battle for its survival today.  These specific measures as claimed by the Government were conceived without considering the plights and specific conditions of our industry and they were also found to be out of bound for majority of the sector due to varied reasons.

FHRAI would like to highlight the lacunae and inadequacies of each of this sector specific relief for hospitality as claimed by the Government through representations and other possible remedial measures at the appropriate forums.

Members are therefore requested to share specific examples / instances on the failure of the above said measures in providing relief from the covid related stress. Personal details of the members will be kept confidential by FHRAI in all communications in this regard.

Please share your valuable feedback by email to sg@fhrai.com.

We look forward to the active participation and support of our members to claim our legitimate rights.

Thanking you,

With best regards,

Gurbaxish Singh Kohli
Vice President
The Federation of Hotel & Restaurant Associations of India
Regd. Office: B-82, 8th Floor, Himalaya House, 23 K.G. Marg, New Delhi - 110 001
Tel.: 011-40780780, Fax: 011-40780777
E-mail: fhrai@fhrai.com, Website: www.fhrai.com 




B-82, 8th Floor, Himalaya House, 23,
K. G. Marg, New Delhi-110 001

Telephone: 011-40780780

Fax: 011-40780777

E-mail: fhrai@fhrai.com


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