Wednesday, November 6, 2019

Fresh funds likely to help housing projects move out of 'stuck' status


The completed and sold projects will start the repayment cycle, reducing bad loans.


The permission to use the Rs 25,000-crore fund for the real estate sector announced by the Union government on Wednesday to revive projects declared non-performing assets or even sent to the National Company Law Tribunal (NCLT) is likely to reduce the stress on the books of lenders.

Senior officials of public sector banks said the fine print was still awaited, but the new fund will help move projects out of the “stuck” status.

The completed and sold projects will start the repayment cycle, reducing bad loans. Bankers said while lenders were getting repaid, clear rules should be in place about who gets paid first.

Amit Goenka, managing director and chief executive officer at Nisus Finance, said the alternate investment fund proposed by the government should have a bottoms-up approach.

The affordable housing projects stuck or delayed should get priority in funding, as that would bring in a large number of competed dwellings in the market.

Along with the AIF, the regulator and the government need to work on a one-time restructuring scheme for good projects which are stuck or delayed for want of funding and approvals.

This will unclog many problem accounts and lead to substantial reduction of stress for banks and NBFCs, said a source who did not want to be named.

Business Standard

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