Lockdown 2.0: On property, SBI tells real estate industry to leverage crisis and set things right

Lockdown 2.0: Developers can reach out to the banks with their revised cash budget, to avail better working capital as RBI has given levy to the banks to reassess the working capital on case to case basis, said SBI Chairman.

Lockdown 2.0: SBI chairman said that post COVID-19 pandemic, real estate industry will have to find ways to complete the project in short span of time. Photo: Reuters

Coronavirus lockdown has been extended till 3rd May and various industries have started to gear themselves up for the post-COVID 19 pandemic. The Real Estate sector that has already been sluggish for a few years, is also expecting some boost from the government and lending institutions to pare the losses incurred by the coronavirus spread. Advising real estate industry on how to withstand COVID 19 pandemic, the State Bank of India (SBI) Chairman Rajnish Kumar has said that developers should leverage the crisis to set things right. However, the SBI Chairman also assured that Indian Banks including SBI will help the sector to get on the growth track.

Rajnish Kumar spoke these things while speaking at the NAREDCO initiated video conversation to understand banks Real Estate perspective.

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In order to manage the macros in these uncertain times, Rajnish Kumar, Chairman, SBI suggested that government borrowings need to be limited to push interest rates downwards. He further added that, allocation of resources has to be made in a manner that it focuses on the healthcare facilities of citizens of the country. He further added, “Country should be prepared to face any situation while managing everything. Post COVID-19 pandemic, real estate industry will have to find ways to complete the project in short span of time. Developers can reach out to the banks with their revised cash budget, to avail better working capital as RBI has given levy to the banks to reassess the working capital on case to case basis.” He also mentioned that the industry should leverage this crisis to set things right in the real estate.

He further added “Government has taken several measures to provide moderate relief. Low interest rate in-turn has impacted the revenue of the government. If they borrow too much money then they will have a higher interest rate problem or depreciation of the currency, Macro level decision needs to be made on how the government borrows and what kind of relief it can give. Economic relief fund is based on the calculation of the output loss, duration of the lockdown and the exit plan.”

Commenting on the discussion Rajeev Talwar, Chairman, NAREDCO said,” Real Estate has been reeling under a lot of stress for past few years and it desperately needs a stimulus to mobilize the sector. Knowing that banks will stand by us in these hard times it is a relief and it will help the sector to get on growth track.”

To come back on track post COVID-19 pandemic, NAREDCO has demanded finance stimulus of approximately 10 per cent of Country’s GDP to re-mobilize the economy as major sectors are currently facing adverse effects of ongoing pandemic. One time roll over from the banks; extension of credit limits up to 20 per cent, sabbatical of 1 year for EMIs to re-mobilize the economy are some major demands that NAREDCO has put towards the finance ministry to bring national economy on growth track. Alternative to subvention schemes for home buyer benefits is also an appeal to consider online agreement for loan sanctions with developers undertaking to infuse some credit flow.

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