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Real estate Developers demand relaxation in Bank loan norms

July 4, 2016


The Confederation of Real Estate Developers' Association of India (CREDAI) has demanded relaxation in bank loan norms to revive the real estate sector, contribute to the country's Gross Domestic Product (GDP), and achieve Housing for All initiative in the country. During the meeting with Raghuram Rajan, Governor, Reserve Bank of India (RBI), Getamber Anand, President, CREDAI, and Jaxay Shah, President-Elect CREDAI, shared that currently the real estate market contributes only six per cent of the GDP as compared to other countries where the real estate contribution is around 10 per cent.


For instance, the real estate market in the United States (US), the contribution of real estate towards the GDP is 17 per cent. In India, the real estate sector is the second largest employer after agriculture and drives growth for housing as well as 250 ancillary industries.


They also pointed out that as per the government estimates, there is a shortage of around 18.78 million houses in the country. To address these concerns, the sector needs to upgrade at least 10 times the present situation.


Housing needs a supporting financial architecture and not a restrictive one stated, the CREDAI officials. Although the gross bank credit is less than three per cent and the net non-performing assets (NPAs) are at zero, the latest financial stability report by RBI shared that the sector has the maximum stressed advances ratio at 19.5 per cent, followed by services sector which is at seven per cent. Other sectors such as mining, iron, and steel, textiles, infrastructure and aviation contribute about 53 per cent of the total stressed advances.


Other suggestions shared by developers were:

  • Increasing the priority limits from 28 lakh to 50 lakh in housing sector in metro cities where the prices are high
  • Make private sector eligible to seek slum rehabilitation loans
  • Providing priority sector status for loans taken for affordable housing projects
  • Treat real estate as an infrastructure sector
  • Banks should aid in the purchase of land like it was done before 2006





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Source: 99acres.com






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