[ecis2016.org] The lenders to housing promoters and builders have said that the new Real Estate (Regulation and Development) Act regime leaves them unprotected and are now seeking clarity on the safety of their loans
Lenders who fund developers for real estate projects, have expressed concern that their role is not covered or lacks clarity under the Real Estate (Regulation and Development) Act (RERA). Consequently, bankers indicated that they were in the process of making a representation before the regulator, to flag their concerns and apprehensions.
You are reading: Realty lenders seek clarity and protection from RERA
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They said only home buyers’ concerns had been addressed if builders failed to deliver promises, sources told PTI. Bankers currently use the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, as their last resort to recover dues from the borrowers.
[ecis2016.org] What is RERA and how will it impact the real estate industry and home buyers?
Though, RERA is to be implemented from May 1, only eight states have enacted the new regulation. Sources said lenders of Maharashtra are taking a lead in this regard, as the state has adopted RERA.
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Realty companies also felt that unless lenders’ interests were not protected, they would stall credit to the sector. “Unless lenders’ interests are protected, it would be difficult for developers to obtain loans for projects,” Emami Infrastructure’s director and CFO, Girja Choudhary said.
Another problem is repayment terms of loans in the new regime, said a real estate industry body official. So far, repayment is linked to money collected by builders. Financiers ask for a certain percentage of money collected from property buyers, as project progresses. “If we have to keep 70 per cent of collection in an escrow account under RERA and bankers ask for 30 per cent for repayments, then what amount will be left with us?” CREDAI Bengal’s president Nandu Belani asked.
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