-CB Edit Desk
The Federation of Hotel & Restaurant Associations of India (FHRAI) has requested the RBI for a special window for restructuring of loans especially for the tourism and hospitality sector. It is seeking specific tweaks in the central bank’s Resolution Framework 2.0, as reported by Plunge Daily.
The FHRAI urged the RBI to extend the benefit of loan restructuring under Resolution Framework 2.0 to those who had applied for it under Resolution Framework 1.0 but were unable to avail it.
Gurbaxish Singh Kohli, vice president of FHRAI, said the industry body welcomed the central bank’s Resolution Framework 2.0 which allows individuals, small businesses and borrowers, and MSMEs exposure of up to Rs 25 crore. “However, the Kamath Committee recommendations for restructuring have made the restructuring plan unfavorable for the hospitality industry,” he said. “Discretions provided to lending institutions by the RBI in the loan restructuring scheme have provided no relief to hospitality players. Lending institutions are either reluctant or impose unreasonable conditions to avail the restructuring window for the tourism and hospitality sector that provisions the removal of Rs 25 crores cap for restructuring.”
The Reserve Bank of India, in the Resolution Framework 2.0, has mandated accounts be classified as standard as of 31 March 2021 to be eligible for restructuring. However, the industry body has pointed out that this condition goes against hotels and restaurants that had already applied under the Resolution Framework 1.0.
DVS Soma Raju, treasurer, FHRAI, said that in view of the abysmal situation of the hospitality sector, the association has requested the central bank to extend the benefit of loan restructuring to all including those who had applied for restructuring under Resolution Framework 1.0. “The RBI needs to remove the condition requiring accounts to be classified as standard as on 31 March.”