Hotel body seeks support from Government, RBI

Our Bureau. New Delhi | Updated on July 28, 2020 Published on July 28, 2020

The Hotel Association of India (HAI) has recommended that the moratorium on interest and repayment of principal is extended till March 31, 2021 and the interest due is added back to the Total Principal Outstanding and the loan term extended by 12 months.

It also suggested that the interest rate be capped at 2 per cent above the prevailing repo rate. HAI has also proposed marginally increasing the lending rate as the health of tourism industry improves.

Worst hit

HAI said that the Covid-19 pandemic has led to over 90 per cent of the demand being lost for the tourism and hospitality sector.

It also referred to a recent study by McKinsey that identified Airlines and Hotels as the worst impacted sector in India. Also, hotel sector features in the list of strained sectors on Debt Service Coverage Ratio. The revenue loss to the industry is expected to be to the tune of ₹90,000 crore in the year 2020.

“Unfortunately, an immediate term solution will only defer the crisis as what is needed is a long-term solution spanning the next 24-36 months which solves for both stakeholders: the borrower (unable to pay the interest and principal for the foreseeable future) and the lender (loans becoming NPAs),” said a statement.

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Published on July 28, 2020
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