The apex body of real estate developers has also requested for one-time rollover and restructuring of disbursed project loans.
“Existing project loans from banks and NBFC’s has to be rescheduled irrespective of NPA status where the projects are commercially viable having positive net worth,” RK Arora, president, NAREDCO-UP has said in the letter.
In order to bring in liquidity to the real estate sector and also to provide last mile funding of these stalled projects, it is necessary to include real estate and hosuing sector in the ambit of RBI’s scheme of rescheduling policy and permit the sanction of last-mile funding to NPA Classified Project Accounts also, with a moratorium of one year for principal and interest, the letter says.
It has also requested the ministry to direct banks and financial institutions to allow fresh project loans as last mile funding to complete the stalled projects, with a moratorium of one year for principal and interest.
Naredco has said that due to the rigid terms and conditions of the SWAMIH fund, very few developers could avail the benefit.
“The guidelines of this AIF-SWAMIH may be amended to provide for sharing of the cash flows with the existing lenders, to the extent that servicing the debt requirements of existing lenders is not termed as default, or otherwise necessary instructions to the banks to issue NOC for priority charge in favour of SWAMIH Fund,” Arora has said in the letter.
Over 50000 real estate projects are registered under various State RERA authorities throughout the country.
Developers said that due to outbreak of COVID -19 and the subsequent lockdown during 1st wave in 2020 and now ongoing unprecedented 2nd wave in 2021 having devastating effects on the real estate sector which was already reeling under severe recession has been crippled by the stoppage of construction, absence of sale and recovery and the mounting liability of interests and salary and wages.
Thousands of projects are struggling to find last mile funding and thousands of home buyers involving home loans of approximately Rs 19 lakh crore are in peril are reluctant to pay their instalments.
Since the COVID-19 cases are yet to subside, it is expected that the construction will suffer for another next 6 months atleast, and even after that, it will take time to restore the material supply chain, re- mobilization of manpower and machines.