The Reserve Bank of India (RBI) has opened a separate On-tap Liquidity Window to help mitigate the adverse impact of the second wave of the pandemic on certain contact-intensive sectors. The move would provide liquidity of ₹15,000 crore till March 31, 2022 with tenors of up to three years.
Under the scheme, banks can provide fresh lending support to hotels and restaurants; entities related to tourism — travel agents, tour operators and adventure/heritage facilities; aviation ancillary services — ground handling and supply chain; and other services that include private bus operators, car repair services, rent-a-car service providers, event/conference organisers, spa clinics, and beauty parlours/salons.
By way incentive, banks will be permitted to park their surplus liquidity up to the size of the loan book created under this scheme with the Reserve Bank at a rate which is 25 basis points (bps) lower than the repo rate.
The hospitality and tourism sector welcomed the decision.
“This is the first significant sign indicating that the government has taken note of the severe effect that the pandemic has had on the hospitality industry and the huge economic impact it will have on the sector as well as the nation,” FHRAI vice-president Gurbaxish Singh Kohli said.
Infusing liquidity would provide much-needed support to cash-strapped hospitality businesses without which the industry couldn’t have survived, he added.
However, Federation of Hotel & Restaurant Associations of India (FHRAI) is of the view that the tenure should be for at least five years as a duration of three years is just not sufficient to recover from the financial turbulence that the industry is going through, Mr. Kohli added.
Echoing similar views, Hotel Association of India vice-president K.B. Kachru said the liquidity window was a major relief to the sector which has been reeling under the devastating impact of the ongoing pandemic.
“Hotels, recognised as one of the most stressed sectors, have been requesting such a relief to be provided urgently,” he said.
Ailing hotels will be able to save related jobs, lives and livelihoods. Hotel loans are less likely to become NPAs, he added.
Indian Association of Tour Operators (IATO) President Rajiv Mehra said, “We welcome the announcement by the RBI offering loans to the tourism and hospitality sector on easy terms and lower rate of interest. Hope tour operators who have had almost zero income for past more than one year, would get some succour out of it”.
(With PTI inputs)
