After raising the MSME credit issue, government is likely to pitch for stress in the real estate sector in the RBI’s next board meeting scheduled on December 14. In addition, infusion of liquidity in the NBFC sector may also come up in the meeting, The Indian Express reported.
“The real estate sector is in a mess with developers finding it tough to raise funds and being forced to stall development and cut their workforce. RBI can always find ways beyond opening a special window, which it feels creates a moral hazard,” The Indian Express reported citing an unidentified government official.
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The commercial real estate (CRE) has gone under a substantial slowdown in the availability of the bank credit post demonetisation, RBI data showed. CRE contracted 0.8 percent over the same period previous year, according to the data. CRE includes the loans which are extended to builders for construction of housing buildings, hotels, shopping malls, industrial parks, office blocks and hospitals, classified as commercial real estate by the central bank.
The last mile funding is the major issue which the developers are facing and if it’s not solved it will have a domino effect on the economy and on home buyers, Getamber Anand, chairman, Confederation of Real Estate Developers’ Associations of India (CREDAI) and CMD ATS Infrastructure, said. The central bank needs to push banks to begin lending to the real estate sector, the central bank.
Meanwhile, in the last board meeting, RBI agreed to defer the period of the implementation of the capital conservation buffer norms under its ‘Basel-III-plus’ capital adequacy norms for banks by a year to March 31, 2020 and to consider a scheme for restructuring of stressed standard assets of MSMEs for aggregate loan size of up to Rs 25 crore.