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Banks told to increase credit flow to ailing real estate sector: Jitendra Awhad

The real estate sector in India is grappling with a severe cash crunch with a downturn in both residential and commercial property segments, with several builders, including those in the financial capital, struggling to repay loans to non-banking financial companies and banks.

By: Express News Service | Mumbai | March 4, 2020 2:28:56 am
State Housing Minister Jitendra Awhad also announced some new initiatives to curtail delays in building approvals in slum rehabilitation and Maharashtra Housing and Area Development Authority-run schemes. (Express)

As a liquidity crisis in the real estate sector deepens, the state government has stepped in to improve credit flow to developers. Housing Minister Jitendra Awhad announced Tuesday in the state legislative assembly that his department has approached banks to improve lending support to industry players.

The real estate sector in India is grappling with a severe cash crunch with a downturn in both residential and commercial property segments, with several builders, including those in the financial capital, struggling to repay loans to non-banking financial companies and banks.

“The sector is witnessing an unprecedented downward spiral. The funding has dried up and builders are grappling with a pile-up of unsold inventory,” Awhad said while replying to a discussion on the affordable housing crunch in the Mumbai Metropolitan Region (MMR).

Lending by banks is the cheapest form of credit for real estate firms, who rely on it primarily for working capital. “We are in discussions with banks to make loan disbursements simpler for construction players,” Awhad said. The minister also announced some new initiatives to curtail delays in building approvals in slum rehabilitation and Maharashtra Housing and Area Development Authority (MHADA)-run schemes.

Under the initiative to improve the Ease of Doing Business, Awhad, announced measures to bring down the time lag between various stages of permissions for slum redevelopment projects. “We have put in a process where the Annexure-II (complete list of eligible slum dwellers along with the certified slum plan) will be issued within three months of submission and acceptance of redevelopment projects,” said Awhad.

“SRA will be the one-stop agency for procuring these permissions. Developers won’t need to make visits to multiple offices… You can label me as being pro-builder. But unless the problems the builders are solved, the housing crisis won’t get resolved,” he said.

Awhad said the government was also planning to push another 30,000 new homes in the affordable housing segment in the Mumbai Metropolitan Region in the coming two years. To enable this, he said, the government has plans to introduce a piece of legislation in the ongoing budget session.

“Nearly 25,000 acres of land acquired for the purpose of setting up Special Economic Zones (SEZs) is lying unused. A bill will be tabled containing provisions whereby if the SEZ developer fails to commence the activity for which the land was acquired on at least 50 per cent of the land within two years, the land will vest in the government,” he said.

He added, “The developers will be reimbursed for the cost of such acquisition at the same rate at which the land was originally acquired. Such land will then be put to use for the construction of affordable homes.”

As per government’s records, only 29 of the 147-odd SEZs notified in the state have become operational so far. “The move will also curb land speculation,” the minister added.

Cracking the whip on errant builders, who have been illegally hoarding tenements meant for project-affected people (PAP), he said the government would initiate criminal action in all such cases if the tenements were not surrendered to the government within a month.

Awhad also announced plans to bring more construction projects within the ambit of the Pradhan Mantri Awaas Yojana (PMAY) by lifting curbs imposed on such projects in the peripheral areas of the municipal corporation limits with the MMR.

Reaching out to the police department, the minister also reiterated that 10 per cent quota will be reserved for the constabulary in MHADA’s housing projects, while another 10 per cent will be earmarked for government’s class-IV workers.

He also discussed plans to transform south Mumbai’s Kamathipura into a business district.

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