Get ready for a specialised bank for tourism

The Tourism Finance Corporation of India (TFCI) is set to have a specialised bank for tourism-related projects by 2016. TFCI has so far funded over 750 tourism projects in the country. TRAVTALK finds out more.

More than 40 per cent of the total room capacities in the authorised hotels have been created with the help of TFCI.

BM Gupta, Chief Financial Officer, Tourism Finance Corporation of India Ltd, (TFCI), said, “If you look at our portfolio so far, in the last 25 years we have helped to build 52,000 hotel rooms. This will account for not less than 40 per cent of the room capacity in India which has been created with help from TFCI in the last 25 years. Nobody understands this industry as well as we do. This is the advantage that our experience and exposure over a period of 25 years has given us. This, in fact, goes into the project appraisal stage. At this stage, what we contribute is enormous. If you look at most of the innovative projects that have come into the tourism industry, we have a helping hand. We comple-

We are attempting to set up a tourism infrastructure company—a 100% subsidiary under TFCI to help smaller projects raise External Commercial Borrowings (ECB). We are very keen to help out in the infrastructure development for tourism-related sectors

BM Gupta, Chief Financial Officer, TFCI

ment the efforts of the state financial institutions.”

He added, “We are attempting to set up a tourism infrastructure company—a 100 per cent subsidiary under TFCI to help smaller projects raise External Commercial Borrowings (ECB). We also plan to set up a dedicated bank under the license provisions of the Reserve Bank of India (RBI). The tourism industry needs a specialised bank, wherein the funds can be raised at a cheaper rate. The focus would be on financing medium and small projects at the initial stage and bigger projects at a later stage.” He said that the Corporation is hopeful of a favourable decision by the RBI on its application, and would be able to set up the bank by 2016.

He further stated, “We are very keen to help out in the infrastructure develop- ment for tourism- related sectors. We give smaller loans, but participate in numerous projects. So our risk is also diverted and not limited to just one or two projects. We would also be willing to give loans for helicopter related projects which will help facilitate Ministry of Tourism, Government of India’s ‘777

Days of Incredible India Himalayas’ campaign.”

For the same, Gupta added, “It is essential to make project a commercial- ly-viable model and to figure out how the revenue stream will be generated. Also it would depend on what kind of assurance is there. It may not happen that today you start an adventure activity at one place, and tomorrow that activity is no more there, and you abandon the area.”

“Such a situation should not arise that there is no taker for that asset. The asset should be built in such a manner that if one operator is not ready, another operator should be able to take it up. Those linkages need to be provided. The asset needs to be created in such a way and financed that it’s a win-win situation for both the lender as well as the entrepreneur. For that, you need to have a firm backup system and backward and forward linkages. Any such asset can be funded by TFCI, provided it is creating for the development tourism infrastructure in the country.”