RERA Requests RBI to Consider Restructure Developer's Business loans

The Real Estate Regulatory Authority (RERA) has requested RBI to allow restructuring in developer's business loans to aid the real estate sector. Due to the ongoing economic slump, the real estate sector is going through a severe crisis. 

 

About 600 promoters are operation in Noida, Greater Noida and Yamuna Expressway are facing liquidity crisis and thus they are unable to deliver flats to homebuyers, states the authority in a letter to RBI. The RERA has sent a letter to RBI after it realized that work on most of the realty projects had been disturbed due to financial issues, which has affected the interest of homebuyers who have invested close to 50,000 crore as estimated by the developer. 

 

Rajive Kumar, Chairman, UPRERA.“The financial institutions are reluctant in providing last-mile funding to promoters. As a result, most ongoing realty projects are facing problems and are in dire need of funding to finish and deliver. Therefore, we suggested to RBI to ask banks to restructure the existing loans so that promoters start getting funds to spend on construction and the sector is revived. We hope for a positive outcome of this.”

 

Thus, the RERA has stated that the restructure would allow borrowers to get relaxations in payment time, reduction on monthly installments, change in the interest rate, and an opportunity to borrow more and various other benefits. 

 

As written to the Ministry of Finance by RK Arora, President of Uttar Pradesh NAREDCO, “The banks and non-banking financial companies (NBFC) have completely stopped giving new loans and are not keen to offer last-mile funding, which was earlier easier to get to deliver projects on an advanced delivery stage. The fund crisis was already there before the Covid pandemic. But now without banks’ support, it is not easy to handle the crisis.”

 

The developers’ groups -- the national real estate development corporation (NAREDCO) and the confederation of real estate developers association of India -- have been requesting restructuring of loans for a long time. They believe this could aid them to deliver various abandoned projects across Noida, Greater Noida and Yamuna Expressway areas.