The Federation of Hotel & Restaurant Associations of India (FHRAI) has flagged the issue of banks not cooperating in loan restructuring and has urged the government to take action. The FHRAI warned that unless immediate steps are taken to address the issue, hotels and restaurants are likely to “succumb” by the year-end due to the lockdown impact. The FHRAI is the apex body, which represents 5 lakh restaurants and 55,000 hotels, in the country.

The FHRAI recently held an interactive webinar with the Principal Economic Advisor, Ministry of Finance – Sanjeev Sanyal. The apex body informed him about the “reservations and non-cooperation of banks in extending the one-time restructuring of loans announced by the government” and requested for his intervention in getting the issue resolved.

The hotel and restaurant sector, which largely consists of small and mid-sized businesses, makes up 12.75% of India’s employment. This sector has been appealing to the government for necessary support ever since the lockdown was implemented in March.   

“We have put forth to him the most critical aspects and issues compounding the sector’s woes. We presented to him the revenue projections which indicate a loss of Rs 1.6 lakh crore and job losses amounting to 5.5 crore if the sector is not revived. With no revenues, but rentals, salaries, statutory bills still to be paid, the industry may succumb by the year end. Indian Hotel and Restaurant (Hospitality) industry contributes about 10 per cent GDP to the country’s economy and needs urgent attention from the Government,” said Gurbaxish Singh Kohli, Vice President, FHRAI. 

Sanyal, meanwhile, suggested focusing on matters that need most urgent attention and narrowed them down to restructuring of existing debts which would require financial restructuring by the banks, bringing back people from their homes to their jobs and specific policies related to hospitality sector. For faster and effective turnarounds, he advised the Federation to identify solutions within the existing systems instead of recommending a new scheme for the sector.

“During the interaction we have informed Mr. Sanyal about our dialogues with the Commerce Ministry for rationalising and cutting down the number of licenses under ease of doing business policy. We also apprised him on the unscrupulous licensing laws including copyrights issues. However, the conversation was mostly focused on the much-needed one-time restructuring of loans with banks and about the issues we are facing in getting it executed. We have recommended that it would do much good to the industry if a single window for redressal with the RBI were to be instated for specific issues,” said Pradeep Shetty, Jt. Secretary of FHRAI. 

Sanyal said the government is aware of issues and hardships faced by the tourism and hospitality sector and assured that it is taking all possible steps to mitigate the damage to the sector. “The Government has announced several measures for businesses across sectors to benefit from it. However, if something isn’t working, the Government will intervene and identify the reasons for it not working. I would ask the industry to flag specific cases and details of the banks, so that we can take measures to address and resolve the issues. I also ask that the Association brings to our attention any specific instances where Banks are not following the directions of the RBI or the Finance Ministry and we will take appropriate action,” he said.