Debt Restructuring Eludes Real Estate
Although the central bank slashed benchmark lending rate by 40 basis points on Friday and extended the EMI moratorium for another three months on term loans till August, a one-time debt restructuring continues to elude the real estate sector. Cited as a major solution for the struggling realty sector developers have been exhorting the government to consider a one-time restructuring of loans. As per the real estate industry experts, it is the main prescription to alleviate the stressed real estate sector. Instead of a piecemeal approach to tackle its woes, realty developers have been seeking a one-time restructuring of stressed developer accounts since it would offer a better way to renegotiate timelines of repayment than all the legal complications that arise from force majeure.
Deo Shankar Tripathi, CEO of Aadhar Housing Finance, said, “The three months’ additional moratorium till August is a timely move to protect customers from the delinquency tag and help lenders protect asset quality. However, this will adversely impact repayment culture. Spike in delinquency is expected after expiry of moratorium. We are hopeful that the government will soon take measures for one – time restructuring of loans and infusion of liquidity to revive the sector”
Uddhav Poddar, MD, Bhumika Group, welcoming the RBI’s move, however added, “We were expecting RBI to allow a one-time restructuring of loans seeing the pain across sectors. We hope to hear some announcement in that regard soon.”
Yash Miglani, MD, Migsun Group added, “Reduced repo rates are likely to benefit borrowers and developers. But as real estate is passing through a challenging phase, one time loan restructuring that has been a long standing demand is warranted at the earliest.”