113513Landlords gain from rental yield increase, tenants’ budget gets spoiled!

The authorities are stepping up their efforts to push stuck housing projects towards completion with the Reserve Bank of India exploring a special tool designed to empower banks to offer additional finance to customers who have been granted restructuring of home loans. The objective is to push real estate projects stuck towards completion, The Economic Times has reported.

Quoting a person whose identity was withheld, the newspaper said in a meeting that took place on June 19, a meeting was held to scrutinise the issues facing stalled real estate projects. Former Niti Aayog CEO Amitabh Kant, who is now the G20 sherpa was the leader of the committee. This meeting discussed threadbare the possibility of a special move to disburse extra money for the home loan buyers who were victims of these projects.

An official who was present in that meeting said, “The RBI representative present in the meeting has assured that the banking regulator will consider the special dispensation, and they are considering it. It’s likely to inform (the panel) about its decision soon.”

Funding flow
Once the RBI takes this decision, banks that have already disbursed a part of the sanctioned loans but had subsequently held back the rest of the money after the projects got stalled can now move to release additional funds in order to enable the buyers complete the purchase.

The banks want that the additional funds that will be provided to these buyers to be categorised as standard assets.

Pushed by the Supreme Court, the authorities have taken coordinated action over the past few months so that banks who had lent to these projects would surrender their first rights in order to pave the way for fresh financiers to provide additional funds to allow developers complete these projects. The banks have realised that this could be their last chance to relent and let the new financiers get the first right since this belated move might help them realise their dues and help the completion of the projects.

This multi-pronged approach involved the RBI, Indian Banks’ Association, the Real Estate Regulatory Authority and SWAMIH (Special Window for Affordable and Mid-Income Housing) to take these projects towards completion.

NCR, Mumbai worst hit
Incidentally, two-thirds of the stalled real estate projects that have locked up more than Rs 2 lakh crore of hapless homebuyers are in the Delhi-NCR and Mumbai Metropolitan Region. This fund represents about 60% of the dwelling units in these projects.

According to the report, Ravi Mittal, the chairman of the Insolvency and Bankruptcy Board of India, Vivek Joshi, the financial services secretary, officials of the ministries of housing affairs and finance, CEO of the Noida Development Authority, senior officials of SBI Cap Ventures and Indian Banks’Association attended the meeting on June 19.