RBI allows home loans restructuring of realty companies

The RBI has decided to allow banks to restructure loans of companies based on the project and not the developer. The initiative will not just benefit developers but homebuyers as well and also act as a breather for stuck projects.

Mani Rangarajan, Group COO, of Housing.com Makaan.com/ PropTiger.com, said, "The apex RBI's permission to banks for loan restructuring to real estate companies has come as a gift for developers as many developers are not in a position to sustain after going through financial difficulty, which is a loss not only for them but for the buyers also as they find projects getting stuck. The fear, earlier, was that if loan restructuring is based on the company, then it would not be able to get funds for other projects even if it has defaulted on one project amongst the many projects that it is working on. In the latest announcement, the RBI has taken the right decision by basing the loan restructuring on a project basis, which was the expectation of the real estate developers." RBI has taken multiple decisions this year that would help the real estate sector. One of which is that the new housing loans would only be linked to Loan to Value (LTV), which will help the buyers get loans easily and realize their dream of buying a home. The market has already become buyer-friendly, and with authorities sorting out the issues faced by the developers, the real estate sector is on the right path.

Pradeep Aggarwal, Founder & Chairman, Signature Global Group & Chairman, ASSOCHAM National Council on Real Estate, Housing and Urban Development, said, "Another relief has been granted by the apex bank for improving the sentiment of the real estate sector, which has a poignant effect on the nation's growth rate. The fact that banks can now restructure loans based on the projects and not developers is a move to ensure stability in the sector. This is a breather for stuck projects, which are unable to kick start their construction due to scarcity of funds." Developers say that the decision of the RBI to consider loan restructuring based on the project and not on the company will be beneficial for the companies that have multiple projects and are not getting loans for their projects because of any default in one project.

Amit Jain, MD of Mahagun Group informed that this will improve optimism in the market, which is already upbeat with buyers and investors flocking the project sites to book a real estate asset. "Another recent announcement that is beneficial for the sector is that the new housing loans will be linked to LTV only; this will help buyers to realize their dream of owning a home. Multiple decisions were taken by the RBI to improve the health of the real estate sector, and as a developer, we welcome it wholeheartedly."

Vikas Bhasin, CMD, Saya Homes, said, "The loan restructuring decision will help the developers to complete projects that would have got stuck due to non-availability of loans after default in one of their projects. The RBI is taking decisions not only in favour of the developers but buyers too as recently it announced that the loans will now be linked to loan to value only, which is going to help the buyers get more loan and is especially beneficial for buying high-value homes."