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Realty sector hails debt recast move

Property registration ban stir up hornet’s nest in Telangana
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Property registration ban stir up hornet’s nest in Telangana

Highlights

Real estate bodies say the step will give a breather to cash-starved builders facing liquidity issues

Real estate industry hailed the RBI's decision to allow loan restructuring window for corporates, saying it will provide a breather to cash-starved builders who are facing liquidity issues due to low sales in view of Covid-19 pandemic.

The RBI on Thursday announced a loan restructuring window for corporates following bankers and industry demand. The restructuring will be allowed as per the prudential framework issued on June 7, 2019.

"The Covid-19 resolution framework announcement which aids not just one time restructuring but allows banks and borrowers to come up with a resolution plan to come out of this pandemic together," Credai Chairman Jaxay Shah said.

The move of bringing in K V Kamath to head a committee to advise on the financial parameters needed to be kept/maintained across sectors for borrowers who apply for this resolution recasting loan plan shall help in detailing very sound guidelines to aid the industry growth, he added.

Naredco president Niranjan Hiranandani said: "A positive step by Reserve Bank of India to pay heed to India Inc's long pending demand of one-time restructuring of loans without classifying them as NPAs, by setting up an expert committee steered by KV Kamath."

The opening up of the window for the restructuring of loans to companies, individuals and MSME under mandated safeguards grants breather to the liquidity strapped industry, he said.

Additionally, liquidity of Rs 5,000 crore announced to be infused in NHB will definitely aid the reeling housing sector to tide over the liquidity crisis, he added.

Anarock Chairman Anuj Puri said, the allotment of Rs 5,000 crore to NHB will help infuse capital into the HFCs and eventually provide relief to developers battling liquidity issues in COVID-19 times. Knight Frank India CMD Shishir Baijal said: " The loan resolution plan, which allows for payment moratorium of up to 2 years, for corporate and personal borrowers should provide a breather to stressed real estate developers and individual borrowers in the housing segment alike."

"We look forward to the recommendations of the Kamath Committee on the details for the real estate segment," he said.

Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure, said he was expecting some more support during these troubled times. "Although the recent RBI monetary policy continues to provide some short term relief to the real estate sector, the introduction of some special initiatives for developers and homebuyers would have been ideal", he added.

Dutt hoped that the government addresses some of the much-needed requirements of the real estate sector like the single-window clearance mechanism and granting of industry status. Additionally, revolutionary measures such as the prospective 100 per cent FDI policy for investment in completed projects would prove to be highly beneficial in overcoming the liquidity crisis caused by the pandemic, he added.

Omaxe CEO Mohit Goel said the decision to constitute an expert committee under eminent banker KV Kamath to recommend financial parameters, along with the sector-specific benchmark for resolution plans is a welcome step.

The announcement by RBI to facilitate the NHB with the liquidity of Rs 5000 crore will enable it to lend more in the housing sector and boost demand, said Aarti Khanna, founder and CEO, AskCred.

Nitesh Kumar, MD & CEO, Emami Realty, said: "Real Estate is struggling with COVID-19 crisis and poor demand. We were hoping for a further cut but due to food inflation and rise in fuel prices RBI has taken a pause."

Naredco West President Rajan Bandelkar said: "The RBI has approved a long pending demand of the real estate sector to allow one-time restructuring of loans. This will boost the much-needed liquidity and streamline stressed assets in the real estate sector."

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