Budget 2019: Govt should instruct banks to allocate part of new disbursements for critical needs of real estate sector

Funding (or rather lack of) is a real concern for the real estate industry. In the past five years, the share of banks in addressing the funding needs of the real estate industry has been going down with most of the demand being catered to by the housing finance companies (HFC) and non-banking finance companies (NBFCs).

The NBFC crisis, which began in September 2018 is still to dissipate and most of the NBFCs have gone very slow or stopped new disbursals – some are struggling to disburse sanctioned loans. This has hit the real estate industry very hard. With buyers wanting to wait for completion to take advantage of the GST-free dwellings, developers are struggling as they have negligible cash flows from new sales and do not have support from the lenders.

The government has to instruct banks to allocate a certain percentage of new disbursements to cater to the critical needs of the real estate sector since the survival of many developers is at stake. Along with that, it would also impact the delivery of projects and employment. Some directions on this front will be a much-needed respite to the industry.