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Confederation of Real Estate Developers' Associations of India (CREDAI) has written to Prime Minister Narendra Modi to intervene in a bid to ease the credit freeze for real estate sector as developers lack funds to complete ongoing projects.
“This scenario is leading to an adverse impact on the entire real estate eco-system, with ultimately the homebuyers not getting timely possession of their homes,” the industry body said in the communication to the PMO today.
CREDAI has called for the creation of a ‘Stressed Asset Fund’, which will be directed to address last mile funding for completion of real estate projects.
“Presently, the industry is trapped in a downward spiral of unfinished projects and tapering off of demand. At a time when developers are under immense pressure to deliver projects on time, financial institutions are cancelling disbursements after the loans have been sanctioned – leading to the non-adherence of timelines specified to home buyers,” CREDAI said.
Besides demanding a one-time restructuring scheme for bank loans, the association said RBI should include a sub-limit of 10 percent for affordable housing in the overall target of lending 40 percent to the priority sector. “This will help increase flow of credit at cheaper rate to affordable housing,” it said.
For viable projects, prompt corrective action or PCA norms should be relaxed so that such projects are not stalled. While some steps have been taken by RBI, more measures are necessary. “We have submitted a bouquet of options to resolve this pertinent issue of lack of availability of funds for developers. We hope to work together with the concerned authorities and resolve the issue amicably,” CREDAI President Jaxay Shah said.
“The Indian Real Estate sector is the second highest contributor to the country’s GDP. At this critical juncture, we seek Government’s immediate intervention to provide adequate avenues of liquidity to developers to sustain the revival of Indian realty,” Getamber Anand, Chairman, CREDAI National, added.
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