ThinkStock PhotosHoteliers, restaurateurs, travel and salon operators have mostly welcomed RBI's decision of creating a special liquidity window of Rs 15,000 crore with a tenor of three years for contact-intensive sectors such as hospitality and tourism calling it a first 'critical' step which recognises the stress these sectors are facing post the Covid-19 pandemic.
"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. Infusing liquidity will provide the much-needed liquidity support to cash-strapped hospitality businesses without which the industry couldn't have survived,” said Gurbaxish Singh Kohli, vice president, Federation of Hotel & Restaurant Associations of India (FHRAI).
"However, Singh said, the duration of three years is not sufficient to recover from the financial turbulence that the industry is going through and the association would request the RBI to extend it for five years. "We are also relieved with the RBI’s decision to double the maximum aggregate exposure to Rs 50 crore, enabling a larger set of borrowers to avail of the benefits under Resolution Framework 2.0," he added.
Vinutaa S, assistant vice president and sector head for investment information and credit ratings agency ICRA the measure is a welcome move, however, given the inherent stress in the hospitality space and the fact that credit risk will continue to remain with the banks unlike with ECLGS, the actual benefit for the sector from the aforesaid liquidity window remains to be seen.
The special window announced on Friday, encourages banks to provide fresh lending support to hotels, restaurants, travel operators, aviation ancillary services, and others including private bus operators, salons, car repair services, rent-a-car service providers and event organizers.
Aditya Agarwal, CFO of Cleartrip said the measures announced by the RBI provide the much-needed support to the industry participants, and allow the industry to be well prepared to meet customer needs once the impact of the pandemic eases.
Vikram Bhatt, director of Enrich Salons said the measures are coming at the right time. "It gives some credibility to the industry. Just about a week ago, the Beauty and Wellness Association of India had sent a petition to the finance minister for some relief and liquidity measures. Somebody has heard us. But again, the last mile execution will be key. How the banks take it is important. That is where all the ifs and buts start happening," he added.
While making the announcement, RBI governor Shaktikanta Das said that 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 under the reverse repo window at a rate which is 25 bps lower than the repo rate or, termed in a different way, 40 bps higher than the reverse repo rate.
"The spread on the repo rate indicates even our interest rates can go down. That can bring some relief on the borrowings. We are hopeful that these measures will solve some of the liquidity issues for all of us," Bhatt said.
"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. Infusing liquidity will provide the much-needed liquidity support to cash-strapped hospitality businesses without which the industry couldn't have survived,” said Gurbaxish Singh Kohli, vice president, Federation of Hotel & Restaurant Associations of India (FHRAI).
"However, Singh said, the duration of three years is not sufficient to recover from the financial turbulence that the industry is going through and the association would request the RBI to extend it for five years. "We are also relieved with the RBI’s decision to double the maximum aggregate exposure to Rs 50 crore, enabling a larger set of borrowers to avail of the benefits under Resolution Framework 2.0," he added.
Vinutaa S, assistant vice president and sector head for investment information and credit ratings agency ICRA the measure is a welcome move, however, given the inherent stress in the hospitality space and the fact that credit risk will continue to remain with the banks unlike with ECLGS, the actual benefit for the sector from the aforesaid liquidity window remains to be seen.
The special window announced on Friday, encourages banks to provide fresh lending support to hotels, restaurants, travel operators, aviation ancillary services, and others including private bus operators, salons, car repair services, rent-a-car service providers and event organizers.
Aditya Agarwal, CFO of Cleartrip said the measures announced by the RBI provide the much-needed support to the industry participants, and allow the industry to be well prepared to meet customer needs once the impact of the pandemic eases.
Vikram Bhatt, director of Enrich Salons said the measures are coming at the right time. "It gives some credibility to the industry. Just about a week ago, the Beauty and Wellness Association of India had sent a petition to the finance minister for some relief and liquidity measures. Somebody has heard us. But again, the last mile execution will be key. How the banks take it is important. That is where all the ifs and buts start happening," he added.
While making the announcement, RBI governor Shaktikanta Das said that 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 under the reverse repo window at a rate which is 25 bps lower than the repo rate or, termed in a different way, 40 bps higher than the reverse repo rate.
"The spread on the repo rate indicates even our interest rates can go down. That can bring some relief on the borrowings. We are hopeful that these measures will solve some of the liquidity issues for all of us," Bhatt said.
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