Lead Story

MoT urges lowering of TFCI loan interest rates

Jyoti Koul - New Delhi

In a bid to make the interest rates on the loans offered by the Tourism Finance Corporation of India (TFCI) as competitive as other financial institutions, the Ministry of Tourism (MoT) has written to the planning commission to unify the interest rates.

As per the proposal given by the MoT to the planning commission for incorporation of the 11th plan document, it proposes that since TFCI’s loans to hotels are disbursed at a higher interest rate than IDBI, IFCI or FT, the interest rates need to be unified or preferably be the same as those offered for the housing sector, thus encouraging the hotel industry.

The proposal by the ministry suggests that TFCI needs to cater to smaller units as well and that loans should also be offered to tourism for the non-accommodation sector like convention centres, amusement parks, golf resorts, transport fleets, cruise liners and adventure sports. According to sources from the TFCI, apart from prime lending rate, the interest rates are about 13 per cent. However, this keeps fluctuating either due to changing market dynamics or from case to case or project to project.

When asked to comment on the above, Archana Capoor, CMD, TFCI said, "We are as competitive as other financial institutions. We are not a private sector funding and one should understand that in a PSU overheads are more and the funding of a project depends on more aspects than just one. TFCI is a profit making company." Nevertheless, TFCI is willing to look at suggestions or proposals if the MoT or any other department approaches them - which they haven't so far.