In a bid to encourage investment in the hospitality sector, the RBI recently notified that hotels be taken out of the high risk category of real estate exposure. This will ensure that banks will give loans to companies at a lower interest rate.
The tourism ministry has been pushing for incentivising the hospitality industry. A ministry statement said.”RBI has notified that hotels be taken out of the real estate exposure for banks to those entrepreneurs who themselves run these ventures. This new incentive would enable hotels to avail larger credits at better interest rates, which would help to lower the overall cost of such hotel projects.”
The tourism ministry had taken up with the finance ministry and the RBI earlier this year to accord infrastructure status to hotel projects and provides fiscal amenities for creation of additional hotel room capacity to meet the surge in demand in the sector.
The hotel segment of the tourism industry is highly capital intensive in nature and has a long gestation period. India is facing a shortage of good quality accommodation for both international as well as domestic tourists.
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