RBI reports - A greater relief for real estate Sector

The reserve bank of India has decided to boost the real estate sector by extending the restructuring of the project loans for a year. This had created a greater relief to the struggling real estate industry. The report mainly aims in promoting the commercial properties that are delayed for reasons beyond the control of supporters. This statement of the act will more effectively work for stuck projects, and it will no way create demand for property. 

The statement relieves that the property loans are delayed for projects that are beyond the control of the promoters and as been extended for another year. 

The RBI has stated that “ It has been decided to permit extension of date of commencement of commercial operations (DCCO) of project loans for commercial real estate; delayed for reasons beyond the control of parameters without downgrading the asset classification, in line with the treatment accorded to other project loans for the non-infrastructure sector. This would complement the initiatives taken by the Government of India in the real estate sector ”.

The Reserve Bank of India also commenced boosting auto loans and consumer homes. Added on, the RBI said from the end of the fortnight January 31, 2020. Banks are allowed to deduct equivalent incremental credit pay off by them as retail loans. 

The RBI announcement has a positive response among the business heads and leaders. Industry veteran quotes “With the lower provisioning requirement for retail loans extended to the housing segment, we hope that the new measure will translate into lower cost of loans for home buyers, as well. For the development side of the business, the long-standing industry demand for asset classification has been addressed. This will augment the liquidity situation for developers too. With these two significant initiatives by the RBI, the real estate sector will hope to make a faster come-back”.

Industry veterans quotes, "This is a big move and will bring much- needed relief to the cash-starved real estate sector - and to both developers and the HFCs from the liquidity perspective. It will help ease out the time for maintaining and managing cash flows for cash- strapped developers and help them complete several stuck projects. That said, it will not address the other major issue faced by the sector - that of continuing low demand”.