Business Today
Loading...

Budget 2020: Why HDFC is pitching for one-time loan recast for realty projects

Budget 2020: The realty sector has taken a beating amid a slowdown forcing the government to announce Rs 25,000 crore of funds to help projects that are stuck

twitter-logoBusinessToday.In | February 1, 2020 | Updated 10:32 IST
Budget 2020: Why HDFC is pitching for one-time loan recast for realty projects
Budget 2020: The realty sector has taken a beating amid a slowdown

Budget 2020: Home financier HDFC pitched for a one-time loan recast for realty projects. HDFC Chairman Deepak Parekh said lenders are unable to write new loans for projects because a new borrowing by an entity that is already a non-performing asset becomes NPA on day one. Parekh's comments came days before the Budget 2020 scheduled to be presented by Finance Minister Nirmala Sitharaman.

The realty sector has taken a beating amid a slowdown forcing the government to announce Rs 25,000 crore of funds to help projects that are stuck. Parekh welcomed the fund as a good beginning and told news agency PTI that it has already approved a few proposals.

HDFC has invested Rs 250 crore in the first Rs 12,500 crore fund anchored by SBI Caps and have a representative on the managing board, he said. Parekh said the remainder fund of Rs 12,500 crore may be anchored by NIIF or some other fund.

FULL COVERAGE:Union Budget 2020

"We have requested the NHB (National Housing Bank, sector regulator) and others to take a relook at the provisioning and the NPA issue on projects that are stuck and need the last mile funding," said Parekh to the news agency.

RBI had discounted the practice of loan recast few years ago but created an exception for small businesses after Governor Shaktikanta Das took over the apex bank.

Also read: Budget 2020: Watch Live Streaming on Aaj Tak, India Today, live telecast channels

Parekh said that one-time restructuring is absolutely necessary and that they have consulted regulators. He added that there were precedents of such reliefs by the apex bank in the past including in 1993 as well as after the global financial crisis.

Lack of environmental authority or NGT approvals that prevent a project from taking off is one of the primary reasons why a promoter faces financial stress leading to NPAs.

Parekh, however, said that a revival in the realty market is unlikely soon and urged investors to forget about their bets for the next five years, when it comes to residential real estate. He said that this is a good time to buy houses for staying. He said that commercial market is, however, booming.

Also read: Budget 2020 Date: When is Union Budget, Expectations from Modi govt, Time, where to watch

Also read: Budget 2020 Live Updates: FM Nirmala Sitharaman to present budget at 11 AM; middle class, corporate await surprise

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close