It may be noted that the RBI has taken multiple decisions this year that would help the real estate sector.
Developers say that the decision of the RBI to consider loan restructuring based on the project and not on the company will be beneficial for the companies that have multiple projects.
The RBI has recently allowed banks to restructure loans to realty companies on the basis of the project and not the developer. This move, according to industry experts, will not only benefit developers but homebuyers as well, and also act as a breather for stuck projects.
Commenting on the same, Mani Rangarajan, Group COO, Housing.com/ Makaan.com/ PropTiger.com, said, “The apex bank’s permission to banks for loan restructuring to real estate companies has come as a gift for developers. Many developers were not in a position to sustain after going through financial difficulty, which was a loss not only for them but for the buyers also as they find projects getting stuck. The fear, earlier, was that if loan restructuring is based on the company, then it would not be able to get funds for other projects even if it has defaulted on one project amongst the many projects that it is working on. In the latest announcement, the RBI has taken the right decision by basing the loan restructuring on a project basis, which was the expectation of the real estate developers.”
It may be noted that the RBI has taken multiple decisions this year that would help the real estate sector. Recently, it announced that the new housing loans would only be linked to Loan to Value (LTV), which will help the buyers get loans easily and realize their dream of buying a home. The market has already become buyer-friendly, and with authorities sorting out the issues faced by the developers, the real estate sector is all set for a good run.
Pradeep Aggarwal, Founder & Chairman – Signature Global Group & Chairman – ASSOCHAM National Council on Real Estate, Housing and Urban Development, said, “Another relief has been granted by the apex bank for improving the sentiment of the real estate sector, which has poignant effect on the nation’s growth rate. The fact that banks can now restructure loans based on the projects and not developers is a move to ensure stability in the sector. This is a breather for stuck projects, which are unable to kickstart their construction due to scarcity of funds.”
Developers say that the decision of the RBI to consider loan restructuring based on the project and not on the company will be beneficial for the companies that have multiple projects and are not getting loans for their projects because of any default in one project.
“This will further improve optimism in the market, which is already upbeat with buyers and investors flocking the project sites to book a real estate asset. Another recent announcement that is beneficial for the sector is that the new housing loans to be linked to LTV only; this will help buyers to realize their dream of owning a home. In recent past, multiple decisions were taken by the RBI to improve the health of the real estate sector, and as a developer, we welcome it wholeheartedly,” said Amit Jain, MD, Mahagun Group.
Before announcing the loan restructuring based on projects, the RBI in fact has taken other measures also in consideration that will help improve liquidity in the market.
Vikas Bhasin, CMD, Saya Homes, said, “The loan restructuring decision will help the developers to complete projects that would have got stuck due to non-availability of loans after default in one of their projects. The RBI is taking decisions not only in favor of the developers but buyers too as recently it announced that the loans will now be linked to loan to value only, which is going to help the buyers get more loan and is especially beneficial for buying high-value homes.”
Dhiraj Bora, GM-Marketing, Paramount Group, observed, “The sector has been waiting for the loan restructuring, and the latest announcement comes as a relief because it will be done on the basis of projects only. Many of the stuck projects, which were facing funding issues, will now see the light of the day. The demand is already potent, and with the road laid out for more projects to come up, the buyers will have more options to choose from. Not only developers, but buyers also got gifts from the RBI in the form of low home loan interest rates and loans being linked to loan to value only. All these measures are going to have a positive impact on the overall health of the sector.”