“Real estate is the only sector where at every level there is a collateral. It’s important that banks change their outlook towards the sector,” said Rajeev Talwar, chairman, NAREDCO and CEO of India’s largest developer DLF.
Talwar also urged the Reserve Bank of India (RBI) to reduce the risk weightage for the real estate sector. He said lack of bank funding leaves no options for developers but to borrow money from foreign funds at rates up to 28%, thereby increasing the price of homes for buyers.
Another builders’ body Confederation of Real Estate Developers’ Association of India (CREDAI) had also recently called for relaxing bank lending norms in a meeting with RBI governor Raghuram Rajan.
Bank credit of the real estate sector stands at less than 3% of the gross bank credit. The net non-performing assets in real estate sector also stand at zero at present. Despite this, the real sector records the highest stressed advances ratio of 19.5%, followed by services sector at 7% as per RBI’s latest financial stability report.
NAREDCO, formed under the aegis of Ministry of Housing and Urban Poverty Alleviation (HUPA), Government of India, is organising a two-day 13th National Convention and Exhibition on August 19-20, 2016, to deliberate on the existing real estate scenario and prepare road map for various legislative, regulatory, administrative and financial reforms.
Credits ET Realty