Grant ex-gratia to meet difference in interest: Hoteliers

the Federation of Hotel & Restaurant Associations of India (FHRAI), India’s apex hospitality association, has urged the government to reintroduce the scheme granting ex-gratia payment of the difference between compound and simple interest for six months to borrowers from the hospitality sector in view of the second wave of the Covid-19.

The industry hopes for this payment which was done during the first wave, especially since the sector has faced a more severe economic turmoil during the second wave as hositality establishments faced curbs and even closures.

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. Borrowers with loan accounts having sanctioned limits and outstanding amounts not exceeding Rs 2 crore were eligible under the scheme.

The FHRAI has submitted a formal memorandum to Finance Minister Nirmala Sitaraman.

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.

“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 RT-PCR tests,” said Gurbaxish Singh Kohli, Vice President, FHRAI.

“This discouraged a lot of travellers and resulted in a significant drop in occupancy across all hotels. We would like to request the government to take cognizance of the disruptions caused. 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,” said Kohli.