RBI move to allow loan recast at project level to benefit realtors: Experts

Move will help restart projects stuck due to Covid-19. Both buyers and developers will stand to gain when these projects eventually see the light of day

The RBI’s permission to banks to restructure the loans of real estate companies at the project level rather than at the entity level is expected to help buyers and developers, consultants and developers have said.

The moratorium on loan repayments for developers ended on August 31, 2020.

"It is indeed a good move. It will help restart projects stuck due to the impact of the Covid-19 pandemic. Both buyers and developers will stand to gain when these projects eventually see the light of day. From a buyers' standpoint, they will no longer have to wait indefinitely for their homes. As for developers, they  will get the requisite liquidity to eventually complete their projects," said Anuj Puri, chairman of Anarock Property Consultants.

Puri said overall, it will ease liquidity within the cash-strapped real estate sector, which was already struggling even before the pandemic set in. :Covid-19 had only worsened its woes further," he added.

"while the RBI has given its nod to the banks, we will have to wait and see how different lenders carry this forward," Puri said.

Murali Malayappan, Chairman and Managing Director, Shriram Properties said that permitting banks to restructure loans on the basis of the “project” will be a breather for many developers in the present times of pandemic induced cash-flow uncertainties .   

"The rider is that the particular project should have been a Standard Asset as on March 1 2020. This framework will provide needed flexibility to banks to restructure the loans on the “project basis”, as individual  projects are separate legal entities, in general", he said.