The government will create a stress fund under the leadership of Hardeep Singh Puri to help completion of stalled projects
The government will consider creating a stress fund to help stranded homebuyers who have not yet got possession. This was decided during a two-hour meeting between Finance Minister Nirmala Sitharaman and the real estate industry held on Sunday. Several projects are stuck across the nation owing to liquidity crunch and various other reasons.
Housing and Urban Affairs Minister Hardeep Singh Puri, Minister of State for Finance Anurag Thakur and top officials from the departments of Economic Affairs, Revenue, Housing, CBDT, Corporate Affairs and RERA were also present at the meeting.
CREDAI and NAREDCO represented the real estate industry. According to sources, the real estate industry flagged unrest on account of liquidity crunch and poor sales which has resulted in a fragile situation. The real estate industry expects banks and NBFCs to fund real estate projects.
A group will be formed headed by Puri to explore the feasibility of creating a stress fund to complete pending projects. The group will consist of Cabinet Secretary, Housing and Urban Affairs Secretary, Corporate Affairs Secretary and the Rera chief. The group will meet in the next two to three weeks.
The meeting was called as a result of a virtual crisis in the real estate sector reflected in the liquidity crunch, demand slowdown and stalled projects. The industry suggested that financial institutions should also be brought under the ambit of Real Estate Regulatory Act (RERA) to facilitate the completion of stalled projects.
Puri said that they are exploring ways to move forward and solve the problems of homebuyers. Several homebuyers have approached the Supreme Court and judgements have been passed in many cases. Hence it is a complicated area. But Puri is optimistic and said that they will find solutions to the existing problems.
CREDAI Chairman Jaxay Shah said that the government is well aware of the issues impacting real estate, including liquidity crunch and taxation. Stating that five lakh buyers have not got their dwelling units due to huge delays in delivery, homebuyers’ body Forum for Peoples’ Collective Efforts (FPCE) President Abhay Upadhyay demanded the creation of Rs 10,000 crore stress fund to complete such projects.
NAREDCO President Niranjan Hiranandani said,
“The issue of stalled projects in the NCR region and how it can be sorted came up.”
The industry associations believe that reduction of interest rates on home loans to 7 percent and withdrawal of the recent NHB circular prohibiting subvention scheme would help address the sector’s issues. They also said that the National Infrastructure Investment Fund (NIIF) can be a good source of funding for commercially viable real estate projects.
This can be considered by NIIF if the requirement that real estate projects be covered under the ‘infrastructure’ definition and are not limited to affordable housing as defined under the harmonised list of infrastructure notified by the government is met.
Source: Financial Express
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