The lenders to housing promoters and builders are feeling unprotected under the new RERA (Real Estate Regulation and Development Act, 2016), regime and seek clarity on safety of their loans. Lenders who fund developers for real estate projects feel their role is not covered or lacks clarity in the new regulatory framework. They said only home buyers concerns had been addressed if buildets failed to deliver promises, sources told PTI.
Bankers currently use the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act as their last resort to recover dues from the borrowers.
Bank sources indicated that they were in the process of representing before the regulator to flag their concerns and apprehensions.
Though, RERA is to be implemented from May 1, only eight states have enacted the new regulation. Sources said lenders of Maharashtra are taking a lead in this regard as the state has adopted RERA.
Realty companies felt unless lenders’ interests were not protected they would stall credit to the sector.
“Unless lenders’ interest is protected, it would be difficult for developers to obtain loans for projects,” Emami Infrastructure’s Director and CFO Girja Choudhary said.
Another problem is repayment terms of loan in new regime, said a real estate industry body official.
So far repayment is linked to money collected by builders. Financiers ask for a certain percentage of money collected from property buyers as project progresses.
“If we have to keep 70 per cent of collection in escrow account under RERA and bankers ask for 30 per cent for repayments, then what amount will be left with us, “CREDAI Bengal’s President Nandu Belani asked.