The government is targeting to implement in the next one-and-a-half month its decision to set up a Rs 20,000-crore fund for those stalled housing projects that have neither been declared insolvent nor turned bad loans, sources said.
Last week, Finance Minister Nirmala Sitharaman announced that the government will set up a special window to provide last-mile funding for housing projects that are non-NPA and non-NCLT in the affordable and middle-income category. In the fund, Rs 10,000 crore will be contributed by the central government and roughly, the same amount will come from outside investors.
During the meeting, real estate developers said the Rs 20,000 crore could be a non-starter because most of the stalled projects have either gone into the National Company Law Tribunal (NCLT) or become non-performing assets (NPA). Many projects are on the verge of becoming NPA, the sources said.
The developers suggested that loan of the real estate industry should be restructured one time so that more projects could become eligible to get money from the stressed asset fund, they added. Realtors expressed concern over individual homebuyer taking real estate firm into the NCLT and demanded that there should be an amendment in the insolvency law. The meeting was attended by senior officials of the finance ministry, while the industry side was represented by realtors’ apex body CREDAI Chairman Jaxay Shah and its President Satish Magar.
Prestige group CMD Irfan Razack, Brigade group CMD M R Jaishankar, ATS group Chairman Getamber Anand, property consultant Anarock Chairman Anuj Puri, Rustomjee group CMD Boman Irani and Credai Secreatry Pankaj Goel were present in the meeting.
Realtors mentioned that deluge of policy changes in the real estate sector, such as new law RERA and the goods and services tax, have affected housing demand and urged the government to focus on facilitating completion of stuck projects to provide relief to homebuyers.
The developers should withdraw its decision to ban subvention scheme as it was for the benefit of homebuyers and helped generate demand.
In July, the National Housing Bank (NHB) asked housing finance companies (HFCs) to “desist” from offering loans under subvention scheme, wherein real estate developers pay home loan interest on behalf of home buyers till possession of flats.
Meanwhile India’s apex realtors group has also said it is disappointed with the government’s measures to support the sector, as it did not address the key demands such as tax rebate and lower interest rate for home buyers and developers.
CREDAI President Satish Magar termed the government’s announcement as “half-hearted attempt” to revive the ailing real estate sector. He said bold decisions were needed to help revive the crumbling real estate sector. The government’s announcement was “disappointing” not just for the industry but also for the lakhs of people employed within the real estate sector, Magar said.
The CREDAI President said the government should “work towards resolving the root cause instead of just announcing piecemeal reforms that will not have a tangible impact in the long run.” However, property consultant CBRE India Chairman and CEO Anshuman Magazine said the measures announced by the central government to boost the housing sector are encouraging and in the right direction.
“Through these steps the government has provided relief to delayed housing projects as well as promoted affordable housing projects,” said Magazine, who also heads CBRE’s South East Asia, Middle East and Africa business. Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure, said the government’s decision to provide the much-needed last mile liquidity to the affordable and middle-class housing sector is a positive news for the industry. “This funding for non-NPA and Non-NCLT projects would not only arrest the rise of NPA’s but also reduce the NCLT & RERA complaints overall. This will provide relief to the customers and help restore confidence in the housing sector,” he said. Dutt said the housing sector requires a funding of over Rs 3 lakh crore and this decision is the first step to infuse liquidity in the sector.