The Reserve Bank of India (RBI) is considering a "special dispensation" that would allow banks to provide additional financing to customers with restructured home loan accounts to assist in completing stalled housing projects. A committee, led by G20 sherpa Amitabh Kant, discussed the issue of stalled projects in the real estate sector, and lenders expressed the need for regulatory relief to release extra funds through restructured or revived home loan accounts. The RBI is currently evaluating the proposal and is expected to make a decision soon.
The Reserve Bank of India (RBI) is reportedly exploring the possibility of offering a "special dispensation" to banks, allowing them to provide additional financing to customers with restructured home loan accounts. The objective is to assist in the completion of stalled housing projects. According to sources familiar with the matter, during a meeting held on June 19, a committee led by G20 sherpa Amitabh Kant discussed issues related to "legacy stalled projects" in the real estate sector. Lenders present at the meeting expressed the need for regulatory relief, enabling them to release extra funds through existing individual home loan accounts that have been either restructured or revived.
Sources who attended the meeting revealed that the RBI representative gave assurances regarding the consideration of this special dispensation. The banking regulator is currently evaluating the proposal and is expected to inform the committee of its decision soon. If the relief is granted, it would potentially allow banks to disburse the remaining amount of sanctioned loans, which had been held back due to stalled construction projects, without diluting their asset quality.
At the meeting, it was disclosed that the National Capital Region and Mumbai alone accounted for approximately two-thirds of the total number of stuck housing projects in the country. Additionally, around 60% of the unfinished units had been purchased by home buyers who had committed close to Rs 2 lakh crore in capital.
Notable attendees at the meeting included Ravi Mittal, the chairman of the Insolvency and Bankruptcy Board of India, Vivek Joshi, the financial services secretary, senior officials from the ministries of finance and housing and urban affairs, a representative from the RBI, and CEOs from various organizations such as Noida Authority, the Indian Banks' Association (IBA), and SBICAP Ventures.
Earlier reports suggested that the government was considering a multi-faceted approach to address the challenges faced by the housing sector. This approach involved leveraging mechanisms such as the Real Estate Regulatory Authority, the SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund for last-mile financing, and the Insolvency and Bankruptcy Code (IBC). These measures aimed to resolve the stress in housing projects and ensure the timely delivery of homes to buyers. In addition, an innovative IBC mechanism for housing was being explored as part of this comprehensive strategy.
The RBI's potential special dispensation to banks regarding additional finance for customers with restructured home loan accounts could serve as a significant boost to complete stalled housing projects. The discussions held during the committee meeting shed light on the high concentration of stuck projects in key regions and emphasized the substantial investment committed by home buyers. With various stakeholders working towards resolving the challenges faced by the real estate sector, there is hope for faster progress in delivering much-needed housing units to buyers.
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