Real estate sector raises the pitch for further rate cuts

Written by Sanjay Jog | Mumbai | Updated: Jan 8 2009, 03:57am hrs
Even as the Reserve Bank of India (RBI) and the Centre have announced second stimulus packages, the crisis ridden realty and housing sector has demanded more sops.

In its maiden interaction with the RBI on Tuesday, the Confederation of Real Estate Developers Association of India (Credai) has made a strong pitch for bank lending for developers much below the present prime lending rates.

Besides, Credai argued that the housing loan limit, which was recently brought down to Rs 20 lakh with an interest rate of 9.5%, be extended upto Rs 35 lakh and house buyers be charged a rate of interest of 7.5% to 8%.

Moreover, the developers sought the Reserve Bank of Indias (RBIs) intervention so that banks both public and private sector lend aggressively to the housing and realty sector. Sunil Mantri, chairman of Mantri Realty Ltd and vice-president of Maharashtra Chamber of Housing Industry told FE, Even as the Centre has taken pro-active steps by announcing two stimulus packages, banks are still reluctant to provide loans to developers.

We requested the RBI governor to direct banks to aggressive lend to the realty and housing sector as it will help expedite growth in other sectors such as cement, steel, aluminium, Mantri said, adding that more lending from banks will speed up project implementation and result in more purchases from home buyers.

A Credai representative recalled the pro-active measures taken by the NDA government in 1998 for the realty and housing sector and argued that it had led to the growth of other sectors as well as the GDP.

A similar stand by banks will be helpful to this sector. The Credai representative also called for FDI in housing and realty sector to bring in the much-needed funds. Opening up of the sector will lead to more funds especially from foreign investors, he added. However, the RBI has indicated that this will not be possible in the near future.