New Delhi: As the pandemic and the resultant nationwide lockdown severely affected economic activities in the country, a senior official of the State Bank of India (SBI) has said that the financial crisis in the hospitality, tourism and aviation sectors will be prolonged compared to the other sectors.
Speaking at a webinar organised by the PHD Chamber of Commerce and Industry on Tuesday, Sujit Varma, Deputy Managing Director, Corporate Accounts Group, State Bank of India said that the lockdown has severely affected the cash flow of companies, increased working capital requirement and led to a collapse in demand.
"Financial crisis of hotels, aviation and tourism is going to be much more prolonged, because we are dealing with a much more complex situation here," he said.
Talking of the situation in the aviation sector, Varma said that most of the aircraft of airline companies are leased by global investment banks who have investment specialised outfits only for leasing and unless these lessors decide to stagger or defer lease payments, the airlines would face a huge crisis.
Noting that several airlines have approached the bank and India's largest state run bank is in talks with the companies along with the Ministry of Civil Aviation, he said that currently the risk appetite of banks to lend to airlines is "extremely" low.
Read more: Economy can't be revived unless medical science finds an answer to Coronavirus
"Given our past experience (with) Kingfisher and Jet Airways. The risk appetite to lend to airlines today is extremely low. Airlines have very little security to offer other than their cash flows," he said.
Varma also raised concerns over the outlook of air passenger levels and said: "One does not know how soon we can come to pre-covid levels of air travel."
The President of PHD Chamber of Commerce and Industry, D.K. Aggarwal, also said that COVID-19 pandemic has come up as an unprecedented crisis that has severely hit sectors like real estate, aviation, hotel, tourism, automobile among others.
He added that these sectors need the most financial attention and funding aids so that they can restart and bounce back in the economy.
(IANS Report)
