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TFCI applies for licence to start bank for tourism sector

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Steena JoyMumbai

The hospitality and tourism sector in India can expect a bank set up exclusively for the sector very soon. Speaking exclusively to Express TravelWorld, B M Gupta, chief general manager, Tourism Finance Corporation of India (TFCI) revealed, “We have submitted an application to the Reserve Bank of India (RBI) for a licence to start a bank for the tourism sector so that the sector can get funds at cheap rates for funding projects. We realised that the sector as well as allied industries related to tourism can benefit from an exclusive bank. I think the preliminary screening of the application has started and we expecting to get the licence approved by December.”

Describing the equity structure, Gupta said, “As per RBI guidelines, the minimum equity has to be `500 crore. Regarding a bank’s structure, the entire bank’s equity has to be held by a non-operative holding company. This company will hold the entire equity of the bank initially. The equity will then be subscribed to by TFCI.”

Commenting on how this bank will impact the tourism sector, he said, “What we have contemplated is that tourism will be the mainstay of the bank. There are a lot of opportunities for financing of SMEs. This will be our main focus. TFCI has financed more than 700 projects related to tourism in the country. Some of these projects are in undeveloped areas, that are new like heritage projects, for example Mukundgarh Fort or Devigarh Fort – these are not in main cities but outside the city limits. We will be making them anchor products for the bank and from there we will use the bottom up approach We would mainly like to fund the SME segment.”

He added, “Until now we have been financing hotel projects but there are a whole lot of downstream and upstream projects associated with hotels and other areas which we have not been able to finance due to our existing structure. When we have the banking facility we will be able to raise resources at a cheaper rate and we will also be able to involve all the people involved in these downstream and upstream projects. This will give us a totally different approach – it will not just be a product development approach but also an area development approach.”

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