RERA plans to approach RBI for loan restructuring for real estate sector

The Covid-19 pandemic has impacted almost all industry sectors including real estate. According to the two leading industry bodies – Confederation of Real Estate Developers Association of India (CREDAI) and the National Real Estate Development Council (NAREDCO), developers are unable to avail fresh loans or even loan top ups, that has negatively impacted construction activity of existing projects.

Liquidity is a major concern for the real estate sector and the RERAs of almost all states have been stressing on urgency to restart stalled projects. As per the government estimates, around 458,000 housing units are currently stuck across more than 1,600 projects.

Therefore, the All India Forum of Real Estate Regulatory Authorities (AIFORERA) is in the process of approaching the Reserve Bank of India (RBI) to request for one-time loan restructuring for the real estate sector.

According to RK Arora, President of NAREDCO-UP and Chairman of Noida based Supertech limited that has applied for the government’s stress fund, banks are reluctant to give loans until one-time restructuring of loans is done and developers do not have the money to pay salaries if the liquidity issue is not resolved. It has given a list of 12 stalled projects, where 30% of the work has been completed but requires last mile funding of about Rs. 1500 crore.

According to Developers, the criteria of Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects or SWAMIH fund is difficult to meet, thereby resulting in a last mile funding constraint. Experts are of the opinion that in residential properties where the payment plans were construction-linked plans, the financial institutions are not releasing payments since the construction has stopped due to non-availability of labour.