The government is targeting to implement in the next one-and-a-half month its decision to set up a Rs 20,000-crore fund for those stalled housing projects that have neither been declared insolvent nor turned bad loans, sources said.
To expedite the process, the finance ministry on Thursday held consultations with real estate developers and property consultants for their suggestions as it wants to roll out this fund in the next 45 days, they added.
Industry representatives demanded one-time loan restructuring of developers and changes in insolvency law to have maximum benefit from this fund.
On Saturday, Finance Minister Nirmala Sitharaman announced that the government will set up a special window to provide last-mile funding for housing projects that are non-NPA and non-NCLT in the affordable and middle-income category.
In the fund, Rs 10,000 crore will be contributed by the central government and roughly, the same amount will come from outside investors.
During the meeting, real estate developers said the Rs 20,000 crore could be a non-starter because most of the stalled projects have either gone into the National Company Law Tribunal (NCLT) or become non-performing assets (NPA). Many projects are on the verge of becoming NPA, the sources said.
The developers suggested that loan of the real estate industry should be restructured one time so that more projects could become eligible to get money from the stressed asset fund, they added.
Realtors expressed concern over individual homebuyer taking real estate firm into the NCLT and demanded that there should be an amendment in the insolvency law.
The meeting was attended by senior officials of the finance ministry, while the industry side was represented by realtors’ apex body CREDAI Chairman Jaxay Shah and its President Satish Magar.
Prestige group CMD Irfan Razack, Brigade group CMD M R Jaishankar, ATS group Chairman Getamber Anand, property consultant Anarock Chairman Anuj Puri, Rustomjee group CMD Boman Irani and Credai Secreatry Pankaj Goel were present in the meeting.
Realtors mentioned that deluge of policy changes in the real estate sector, such as new law RERA and the goods and services tax, have affected housing demand and urged the government to focus on facilitating completion of stuck projects to provide relief to homebuyers.
The developers should withdraw its decision to ban subvention scheme as it was for the benefit of homebuyers and helped generate demand.
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.
Source- Business Standard.