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HDFC chairman proposes one-time recast of ‘certain real estate loans’

According to Parekh, if these restructured accounts are considered as standard assets for a period of say, 12 months, lenders will stop being so diffident.

By: ENS Economic Bureau | Mumbai |
Updated: November 7, 2019 4:30:59 am
HDFC, HDFC bank, Deepak Parekh, HDFC Deepak Parekh, real estate, indian express HDFC Chairman Deepak Parekh.

HDFC Chairman Deepak Parekh Wednesday said the crisis of confidence in the real estate sector can be overcome if lenders are allowed a one-time restructuring of certain real estate loans, particularly for stuck projects where building approvals have been delayed.

According to Parekh, if these restructured accounts are considered as standard assets for a period of say, 12 months, lenders will stop being so diffident. “This is not a new suggestion. An exceptional regulatory treatment was permitted by the RBI (Reserve Bank of India) in 2008, which helped revive sentiment. This in itself would enable last mile funding even to assets that have slipped owing to tight funding conditions and ensure that these projects are completed,” he said.

“Critics may argue that this (restructuring) is kicking the NPA can down the road again or that financial discipline would never set in if we keep making allowances for every sector that gets into trouble,” he said at the ‘India Mortgage Leadership Conclave’.

“But my stance is that real estate loans are different. The value of the land is always there. Delays in granting building approvals is not always in the hands of the developer and we still don’t have a single window mechanism for such approvals,” he said.

“We can’t afford to end up in a situation where we cut off oxygen for even the stronger developers and this could happen if the risk averseness prolongs,” the HDFC chairman added.

“There is no denying that there are pressing issues facing the Indian real estate market and timeliness of action is key to prevent further hemorrhage,” he said.

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