Taking a step forward to cheer-up the hospitality sector, the RBI (Reserve Bank of India) came up with an order, which will help hotels to come out of the high risk category of real estate exposure.

This will guaratee that banks will provide loans to companies at lower rates of interest.

While talking to media, an official from tourism ministry said, “RBI has notified that hotels be taken out of the real estate exposure for banks to those entrepreneurs who themselves run these ventures. This new incentive would enable hotels to avail larger credits at better interest rates, which would help to lower the overall cost of such hotel projects.”

It is well known that the hospitality sector is highly capital intensive in nature and has a lengthy growth period. But, during the past few months, India is facing a downfall of good quality places for international and domestic tourists.

In the beginning of 2009, the tourism ministry had signed a deal with the finance ministry and RBI to provide ‘infrastructure status’ to hotel projects and provide fiscal facilities for setting up additional hotel rooms in order to meet up the increasing demand.