Property Loan in India easy now - Chidambaram
Bangalore: P. Chidambaram, the Finance Minister wants banks should give property loan to builder in order to beat economic slowdown. If banks come to give property loan to construction projects in residential segment then it will be a great help for developers as they are facing challenge to complete their projects on time due to lack of funds, reports Sangita Mehta of Economic Times.
Finance minister brought up the issue of current real estate market scenario in a meeting held with the chiefs of state-run banks. According to a bank chief, “The minister asked banks to give property loan to builder so that are stuck for want of funds. This, according to him, will help kick-start the economy,” reports Economic Times.
However, this year August, the minister has asked government-owned banks to create pressure on real estate developers to reduce property prices, which in-turn will beat economic slowdown. In the recent meeting, the minister analyzed a report on unsold inventories in realty market prepared by Ajai Kumar, CMD of Corporation Bank.
The report is mainly focused on how developers are struggling to arrange funds by taking property loan. So far, several developers only show advances gathered from home buyers who fixed the project deal as a part of their equity. But, such practice should come to an end and developers adopted such practice due to lack of funds to complete their project, according to the people present at the meeting.
Also there was a report stated that nearly 50 percent homes that make up of around half of 323,000 homes which were promised to be delivered in 2013 are running behind construction schedule. Besides, three out of four homes which are about to be delivered in 2014 are expected to be delayed further, according to a survey conducted by Liases Foras.
In 2012-11, the credit from commercial banks to the real estate sector was 8 percent which came down to just 4 percent in the present year, a sign of decreasing nature of the market.