Mortgage lender HDFC has committed to invest Rs 250 crore in the government-led special fund to revive stalled real estate projects, the company's top official said on Wednesday.
Keki Mistry, the vice chairman and CEO of Housing Development Finance Corporation (HDFC), said the revival of the real estate sector depends a lot on banks, which are reluctant to lend to stalled projects due to regulatory issues. The realty sector is very crucial for the economy as it helps creates jobs both directly and indirectly, he added.
Lauding the emergency fund for the real estate sector, Mistry said the government will have to focus on job creation to spur growth momentum. He said the ailing real estate sector needs support of banks.
"The problem is that no one wants to do it because when you lend to a project which is NPA in someone's books, you have to straight away classify (it) as NPA from day one, in which case there is a lot of reluctance on the part of banks to participate," he said.
In November last year, the government had announced a Rs 25,000 crore package to revive stalled housing project in the affordable and middle-income housing segment. As part of the approved measure, the government will invest Rs 10,000 crore into an Alternative Investment Fund (AIF). Meanwhile, the State Bank of India (SBI) and Life Insurance Corporation (LIC) will contribute Rs 15,000 crore to the fund.
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Last month, SBICAP Ventures, an alternative asset management firm which is managing the fund, had announced the closure of its Special Window for Affordable and Mid-Income Housing Fund (SWAMIH) investment fund with Rs 10,530 crore commitments from investors. The fund attracted interest from investors such as SBI, LIC, HDFC and all major state-owned banks.
"We are participating in the fund (with a contribution of) Rs 250 crore," Mistry told reporters on the sidelines of an event by Confederation of Indian Industry (CII).
He said HDFC has been going slow on project loans for the last four to five quarters due to the overall weak subdued environment, but it is focusing on the individual loans segment with the same vigour as before.
Last week, HDFC had reduced the benchmark lending rate by 0.05 per cent, a move that will bring down interest rate for existing as well new borrowers.
By Chitranjan Kumar with PTI inputs