UPRERA Seeks RBI Loam Restructuring for Realty Revival

RERA has requested RBI to allow developers’ business loans to be restructured to help the sector, which is going through a severe crisis amid the economic slump due to the Covid-19 pandemic. A majority of the around 600 promoters operating in Noida, Greater Noida and Yamuna Expressway are facing a liquidity crisis and are thus unable to deliver flats to homebuyers, the authority said in a letter to RBI. The RERA sent the letter in August after it realised that work on most of the realty projects had been disrupted due to fund crunch, affecting the interest of homebuyers. In Noida, Greater Noida and Yamuna Expressway alone, there are at least 600 ongoing realty projects, in which thousands of homebuyers have invested at least R50,000 crore, said an estimate made by the developers. “The financial institutions are reluctant in providing last-mile funding to promoters. As a result, most ongoing realty projects are facing problems and are in dire need of funding to finish and deliver. Therefore, we suggested to RBI to ask banks to restructure the existing loans so that promoters start getting funds to spend on construction and the sector is revived. We hope for a positive outcome on this,” said Rajive Kumar, chairman of UPRERA. The RERA said the restructure will allow borrowers (promoters) to get relaxations in payment time, reduced monthly instalments, change in interest rate and an opportunity to borrow more, among other benefits. “The banks and non-banking financial companies (NBFC) have completely stopped giving new loans and are not keen to offer last-mile funding, which was earlier easier to get to deliver projects on an advanced delivery stage. Fund crisis was already there before Covid pandemic. But now without banks’ support, it is not easy to handle the crisis,” said RK Arora, president of Uttar Pradesh NAREDCO, which has written to the ministry of finance. “The RBI or the government should take much-needed and effective steps to address the financial crisis that the real estate sector has been facing for a long time. If this financial crisis continues longer, it will affect the homebuyers’ interest to a large extent because the developers are not delivering the projects,” said Abhishek Kumar, president of the Noida Extension flat owners welfare association.