Lending support to the long pending demands of developers for one time loan restructuring and financial assistance, former Maharashtra chief minister Devendra Fadnavis said the issues raised by the builders were genuine and need to be addressed immediately.
The comments came at a time when Union Commerce Minister Piyush Goyal asked developers to sell their properties at realistic prices and not look to the government for more concessions.
In a virtual meeting with representatives of over 15 associations of developers operating in the Mumbai metropolitan region, Fadnavis assured that he will, as a representative of the builders, raise their concerns and demands to the government.
"Banks, NBFCs and HFCs have made large investments in the real estate sectors and if these assets are stressed then the money will come in trouble. So, I feel the demand for one time restructuring of loans is logical and definitely I will talk to the government to request and indicate that they should consider this demand," Fadnavis said.
Recently, in a virtual closed-door meeting held with the Naredco members Goyal had said, "...if any of you here feel that the government will be able to finance you in such a way that you can hold longer and wait for the market to improve, the market is not improving in a hurry. Things are seriously stressed and your best bet is to sell".
Mentioning that the government is trying if some concessions can be allowed in ready reckoner rates, Goyal noted that if they are not allowed, builders will have to sell their unsold inventories.
It may be noted that veteran bankers, including HDFC Chairman Deepak Parekh and Kotak Mahindra Bank executive vice-chairman and MD Uday Kotak, had also pointed out that developers should sell off inventories by lowering property prices.
"I recommend that every real estate player move inventory and clear the stock they have. They should not be looking at the rear-view mirror while driving a car, but looking in front," Kotak had said.
Fadnavis also criticised banks, NBFCs and HFCs for not passing on the benefit of repo rate cuts to customers.
"The intention of the Centre and RBI is to revive the sector, However, if banks only think about their profits and margins of 23-25 per cent and do not pass on the benefit then it is wrong as it defeats the intention of the government and RBI.
"All financial institutions should pass on the repo rate cut to all the consumers. This will help to improve the liquidity position. We will do the necessary follow up with the Centre," Fadnavis added.
In its recent revision, the RBI reduced the repo rates by 40 basis points to four per cent and extended moratorium period by another three months to August in the wake of the liquidity crisis due to the COVID-19.
The developers' associations have come together to form a Credai MCHI MMR Action Committee, which has submitted a list of demands of developers in an online petition signed by over 35,000 builders.
Fadnavis informed the developers that he has already briefed Finance Minister Nirmala Sitharaman about the concerns.
Speaking at the event, Credai MCHI President Nayan Shah said the real estate has been hit hard after the COVID crisis.
"We are going to try to get relief from central government and RBI and the finance ministry, but we are not seeing that happening as yet. The 20 lakh crore package does not have anything specific for the sector," he said.
On the demand for facilitating GST input credit for new projects, Fadnavis said the matter has been flagged to the GST Council and a decision in this regard is expected soon.
Fadnavis, however, said India being a diverse country, it is practically impossible to cater to all the needs of each and every sector, but the intention of the Prime Minister Narendra Modi government is to encourage and give impetus to the employment generating industries as well as MSMEs.