The government is expected to be ready with the Rs 20,000 crore stressed asset fund for the nearly 3.5 lakh stalled real estate projects across the country within the next two months, sources told Moneycontrol.
Realtors met Finance Ministry officials on September 19 to discuss about modalities of the stressed asset fund, procedures and eligibility criteria.
"We had discussions with Finance Ministry officials on how to make the fund more effective. We apprised the Finance Ministry officials of our practical difficulties and we were informed that the ministry would be out with the fund very shortly, possibly in the next 60 days," he told Moneycontrol.
Satish Magar, President, CREDAI National, said a one-time restructuring of loans will ease out a lot of problems for majority of developers.
"We have recommended that there should be a one-time restructuring of real estate loans. Several projects have become NPA because of the 90-day cycle being too short in the context of real estate sector. We have asked them to look into our demand for one-time restructuring of real estate loans and they are positively considering it. If this goes through, then several developers whose projects are stuck because of lack of funding following the NBFC crisis can be rescued from the fund," he said.
CREDAI representatives also discussed the issue of RERA being given more teeth and changes in the insolvency law. They also recommended that decision to ban subvention scheme should be withdrawn. 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.
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Reacting to today's announcement by Finance Minister Nirmala Sitharaman on corporate tax rates, Magar said that this will provide relief to real estate firms as well and bring about a change in the overall perception of the industry and the economy as a whole.
"FM's generous reduction in corporate tax makes India the most competitive investment destination and beckons entrepreneurial activity to reach new highs. The series of announcements by FM are most reassuring as they tell of the Government being sensitive to the economic needs of the people. We are most hopeful that the special needs of housing would soon get addressed to further accelerate the investment cycle," he said.
The government last week announced a Rs 20,000 crore special window to provide last-mile funding for completion of around 3.5 lakh stuck housing projects which are not NPAs or facing bankruptcy proceedings under NCLT to ensure that at least healthy projects are not pushed into a bad debt.
Sitharaman on September 14 had announced a special window worth Rs 10,000 crore for last-mile funding of non-NPA and non-NCLT housing projects. This will provide relief to homebuyers stuck in incomplete projects totaling nearly 3.5 lakh units across the country,
"A special window to provide last mile funding for housing projects which are non-NPA and non-NCLT projects and are networth positive in the affordable and middle-income housing category will be set up," the FM said addressing her fourth such conference since mid-August to announce measures to boost the ailing economy. The objective is to focus on the construction of unfinished units that number around 3.5 lakh units. The size of the fund would be Rs 10,000 crore and would be contributed by the government of India and roughly the same amount by outside investors," she had said last week.
vandana.ramnani@nw18.com
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