To enhance its effectiveness and practicality
FAITH, the Policy Federation of all the national associations representing the complete tourism, travel and hospitality industry of India (ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI, TAFI) has made suggestions to Finance Ministry, RBI & Tourism Ministry on ECLGS 3.0, introduced on 31st March, 2021, the special credit guarantee window created for tourism, travel and hospitality.
First recommendation draws attention towards the Borrower Status. As per the guidelines issued under clause 4 & clause 7, under clause 1 in the NCGTC letter and in the FAQs number 8 & number 109, this scheme proposes to extend support to tourism, travel & hospitality accounts which were classified as regular, SMA -0 & SMA -1 and whose DPD (days past due ) were not beyond 60 days as on 29th Feb 2020.
However, clause 19 of the operational guidelines mentions that the scheme will not be applicable to accounts classified as NPAs ‘as on’ date of disbursement would not be eligible.
All Government data whether that of GST or of income tax repeatedly has highlighted and affirms that tourism, travel & hospitality is the worst hit sector and there has been negligible to NIL business for majority during the 13 months period since the time pandemic struck India.
Thus, FAITH has suggested to reissue the necessary instructions to have that clause 19 issued in operational guidelines of the scheme to be immediately annulled as it is sending a contradictory message to all MLIs (member lending institutions)
The second recommendation is on Calculation of outstanding. FAITH seeks to consider eligible outstandings for tourism, travel & hospitality as an average of 11 months of FY 2020 ( April 1st 2019 – February 29th 2020 ) as just against the outstandings as of 29th Feb 2020.
The rationale for the same is that October – February is traditionally the peak tourism season in India and thus credit outstanding levels are usually the lowest during February. Accordingly, an 11 months average of outstandings would enable a correct need assessment of the Indian tourism, travel & hospitality enterprises as it would balance out the off- seasons and the peak season accordingly.
The third recommendation is on Moratorium on Interest. There is no moratorium on Interest on funds drawn under this scheme and it has to be paid as per clause 10 of the Guidelines and clause 16 of the FAQS.
FAITH highlighted that due to the second wave of the pandemic there is literally no domestic tourism business. This is on top of complete shutdown of all other segments of tourism – inbound , outbound , corporate and also group tourism business. Without any business, it is practically impossible for tourism, travel & hospitality entities to generate cash flows and to service interest.
It therefore requests allow moratorium on interest too to enable drawdown under the proposed scheme.