Realtors write to Modi asking for one-time restructuring of loans, additional loans without security

New Delhi: Realtors in the country, under the aegis of their industry body CREDAI, have urged the prime minister Narendra Modi for restructure their loans. Calling the present economic crisis a greater one than 2008, the real estate developers have said that all lending institutions must be asked to formulate a one-time restructuring of loans.

“Since real estate was already reeling under a cyclical downturn before COVID-19, such restructuring needs to be allowed for all accounts which were standard as on 31.12.2019” the said in an open letter they have written to Modi.

They have also asked for additional lending equivalent of 20 percent of current real estate project related advances at the MCLR with no additional security. They have said that all the NBFCs and housing finance companies must be asked to have a scheme for such financing where even government can give guarantees if there is need for such a guaranteed and the project should not been be classified as NPA.

In the letter dates 24 May 2020, the real estate developers have asked for waiver of penal interest by banks and NBFCs for one year. 

They have argued that they have cared for the construction workers in the times of crisis and now the government must cede to their demand. They have also asked the government to control cartelization by the raw material makers. They have alleged that there has been an increase of Rs 100-250 per bag of cement and Rs 2,500 per metric tonne of steel. 

They have also asked for waiver of 5 percent GST on affordable houses. The current rule states that there will be 5 percent GST on affordable houses without input tax credit. Also, the present rule of 1 percent GST on affordable houses costing up to Rs 45 lakh is not conducive. The limit of Rs 45 lakh is too low, especially in metros, according to the developers. 

The letter, which has been signed by CREDAI Chairman Jaxay Shah, CREDAI President Satish Magar and CREDAI President Elect Harsh Vardhan Patodia, has also asked for quick operationalization of the alternate investment fund of Rs 25,000 crore announced by the finance minister last year.