The impact of COVID-19 coupled with the loan recovery measures initiated by financial institutions by invoking the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act have cast a cloud over the lives of hundreds of resort, hotel, and homestay owners in the State.
K.G. Rajesh, 52, a coffee planter at Meppadi, took a farm loan of ₹15 lakh from the Kalpetta branch of the former State Bank of Travancore in 2005 by mortgaging 6.5 acres of land to enter into the hospitality sector by converting his house to a six-room home stay.
The business flourished. The planter closed the loan and borrowed ₹35.5 lakh in March 2016 to expand the property. A considerable increase in the inflow of tourists, especially from the U.K., and Germany, was a major motivation. However, he has not been to repay the debts since 2018 once the inflow of tourists came to a halt owing to the recurring incidences of deluge and a Nipah virus outbreak in the adjacent district of Kozhikode.
Moratoriums announced
The government announced moratoriums in 2018 and 2019 on loans due to floods and again in 2020 and 2021 following the outbreak of COVID-19. However, the bank authorities informed him a few months ago that his loan had become a non-performing asset in January 2022 as he was not able to repay on time.
“A few weeks ago the bank authorities told me that if I did not pay ₹61.4 lakh, including penal interest, they would take over my property invoking (SARFAESI) Act,” he said. Recently the officials of the asset recovery management branch of the SBI stuck a notice on the property, which reads that the bank authorities have taken its possession following his failure to repay the debt.
“I don’t know how to repay the amount as I have not received any serious enquiries from tourists for the past five years,” Mr. Rajesh said, adding that he was also forced to spend a large amount for the maintenance of his property.
No buyers too
More than 30% of the hospitality firms in Wayanad are yet to take off after the pandemic, C.P. Shylesh, secretary, Wayanad Tourism Organisation said. Though many owners are trying to sell their property to repay their debts, there are not many takers due to the uncertainties in the industry and land-related issues in Wayanad , Mr. Shylesh added.
“The plight of 80% of the property owners in the tourism industry is almost similar,” V. Sajeev Kurup, general secretary, Confederation of Kerala Tourism Industry, a consortium of 32 tourism-related associations in the State, told The Hindu.
Very limited options
“If a financial institution initiates takeover of a property invoking SARFAESI Act, the property owner has no choice, except to repay the debt or give up the property. As per norms, a borrower cannot challenge the financial institution’s move in a court and can only approach the newly opened Revenue Recovery Tribunal bench in Ernakulum. There, because of dearth of staff, the grievance will be heard only after a long time,” Mr. Kuruppu said.
“Things are looking up and we are organising programmes, including roadshows, to promote tourism, but we need time to repay debts,” he said .
“What we need is quick intervention by the government to halt revenue recovery measures till next March,” Mr. Kurup said.
