Let’s leverage the crisis to set things right in the real estate sector: SBI Chief
Real Estate

Let’s leverage the crisis to set things right in the real estate sector: SBI Chief

As real estate collectively navigates through these unprecedented times of COVID-19 , NAREDCO  initiates conversations with Rajnish Kumar, Chairman, State Bank of India and Indian Bank Association, to understand banks’ perspective towards real estate. Several queries of the developers across the country were addressed through a video conference. NAREDCO suggested a requirement of a finance stimulus of approximately 10 per cent of India’s GDP to remobilise the economy as major sectors are currently facing adverse effects of ongoing pandemic.

The video conference was hosted by Rajeev Talwar, Chairman, NAREDCO; Dr Niranjan Hiranandani, President, NAREDCO; and Rajan Bandelkar, President, NAREDCO Maharashtra, to address the queries of more than 1,800 developers that were a part of the webinar. Guest speaker of the day was Rajnish Kumar, Chairman, State Bank of India & Chairman of Indian Banks Association. During the conference, NAREDCO leadership highlighted several aspects that can be looked upon to revive the economy. One time roll over from the banks; extension of credit limits up to 20 per cent, requirement of financial stimulus from of up to 10 per cent of GDP, sabbatical of one year for EMIs to re-mobilise the economy were broadly discussed. Alternative to subvention schemes for home buyer benefits were also discussed along with an appeal to consider online agreement for loan sanctions with developers undertaking to infuse some credit flow.

In order to manage the macros in these uncertain times, the SBI Chairman suggested that government borrowings need to be limited to push interest rates  downwards. He further added that, allocation of resources has to be made in a manner that it focuses on the healthcare facilities of citizens of the country. He further added, “The country should be prepared to face any situation while managing everything. Post the COVID-19 pandemic, the real estate industry will have to find ways to complete projects in a short span of time. Developers can reach out to the banks with their revised cash budget to avail better working capital, as RBI has given levy to the banks to reassess the working capital on case to case basis.” He also mentioned that the industry should leverage this crisis to set things right in the real estate.

He further added “The government has taken several measures to provide moderate relief. Low interest rate in-turn has impacted the revenue of the government. If they borrow too much money then they will have a higher interest rate problem or depreciation of the currency. Macro level decision needs to be made on how the government borrows and what kind of relief it can give. Economic relief fund is based on the calculation of the output loss, duration of the lockdown and the exit plan.”

Commenting on the discussion Rajeev Talwar, Chairman, NAREDCO, said,” Real estate has been reeling under a lot of stress for past few years and it desperately needs a stimulus to mobiliSe the sector. Knowing that banks will stand by us in these hard times it is a relief and it will help the sector to get on growth track.”

Highlighting real estate’s immediate demands, Rajan Bandelkar, President, NAREDCO Maharashtra, said, “Post lockdown, there will a need to create smaller loans ranging from Rs 5 lakh to Rs 5 crore. The idea is to infuse credit for immediate capital requirement for the developers to kick-start the operations post lockdown. Approximately 1 lakh loans are sanctioned every month and we urge the banks to consider online signing of the agreement where the flat is registered, loan is sanctioned. This can be made possible with developers’ undertaking, followed by a physical signing of the agreement post lockdown.” He further added, “It was an honour to have Mr Kumar to discuss the way forward at a micro level, the industry looks forward to tackle the pandemic with banks support.”

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