Realty Sector To Get Credit To Clear Stalled Projects

Bangalore: The finance ministry is soon coming up with a measure which will help improve the real estate sector. This measure will allow banks to permit funds to developers to complete their stalled projects, which will help revive the growth in economy, reports Surabhi of Indian Express.

“The main aim is to provide credit to unfinished real estate projects, especially those in the residential sector, so that they can be completed and find buyers,” according to a public sector bank senior executive. For housing sector, bank’s credit has rose only by 12.1 percent year on year basis, shown RBI latest data. This means the bank credit is lesser than the growth rate of aggregate bank credit which is 15.9 percent.

“We are looking at a number of options to help revive the construction sector. A decision will be taken soon,” said a senior official, reports Indian Express.

Public sector banks are implicit to have put forward suggestions like lower provisions for banks in the loan norms and allowing loans for particular projects. According to RV Verma, Chairman of National Housing Bank (NHB), they are planning to give refinance assistance of around 9000 crore to home loan organizations by next June.

The issue of revitalizing the growth of real estate sector was raised by the finance minister before because the sector has a huge possibility to push the economy upside. Finance minister brought up the issue of current real estate market scenario in a meeting held with the chiefs of state-run banks. 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. However, several developers are reluctant to reduce property prices and so banks are in helpless situation.

Though, there was a marginal growth of 6.7 percent in construction section in July-September quarter compared to 6.7 percent in the same period last year, market analyst estimated that there is a slowdown in private consumption.

The improvement in construction sector will further boost production level as well as industries related to real estate construction like cement and steel.