SIDBI and NHB are being given liquidity support to the extent of Rs.7000 crore and Rs.4000 crore by RBI to provide liquidity support both SME segment as well as Housing Finance Companies (HFC). Loans have been granted to HFCs to fund less than Rs 20 lakhs of housing dwelling units and would be classified under the priority sector lending. The RBI has also decided to extend the exceptional/ concessional treatment to the commercial real estate exposures which are restructured up to June 30, 2009. 

Pradeep Jain, Chairman, Parsvnath Developers, said priority sector lending up to Rs 20 lakh is very positive for real estate companies but added that he was expecting more form the RBI Governor with respect to restructuring of the existing loan allowed upto 30 June 2009. He added lending rates to realty sector at 14-15% was high and sees the need for it to fall to 10-11%. 

“The real estate industry as a whole definitely will become little more comfortable than it was 3-4 months ago. We expect the RBI to allow ECB norms, to raise foreign funding to the real estate company and some real softening of the rate of interest to the real estate developer.”

 Ram Yadav, CFO, Orbit expected a rate cut to be announced earlier and that too of around 150 bps. “Restructuring of loans given to real estate and not treating them as NPAs till June 2009, seems too short a period.”

Ramesh Sanka of DLF feels the steps announced by the RBI were in the right direction. He hopes these rate cuts translate into low lending rates by banks to common man sooner than later.

Popularity: 13% [?]