Naredco-UP writes to FM seeking help as 2nd COVID wave hits construction work, sales

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New Delhi, Jun 4 (PTI) Seeking a bailout package to revive housing sector, realtors' body Naredco's Uttar Pradesh chapter has written to finance minister, mentioning that construction works at projects have almost stalled due to lack of funds while sales have fallen in view of the second wave of COVID-19 pandemic.

It pointed out that banks as well as NBFCs (Non-Banking Financial Company) are not giving fresh loans to projects and also not disbursing amounts sanctioned to home loan borrowers, leading to a severe liquidity crunch in the sector.

In the letter to FM, Naredco-UP President R K Arora has pointed out the adverse impact of the second wave on UP builders.

'Operations at all levels are more or less suspended. Project accounts with banks have become NPA and the banks and financial institutions are initiating proceedings under Insolvency & Bankruptcy Code (IBC) 2016,' he said.

Banks providing home loans to allottees of these properties are not releasing funds and construction is stalled at almost all projects for want of funds, he added.

'Seeing the impact of the pandemic and the lockdown on the economy, buyers are shying away and no fresh booking taking place,' Arora said.

To save the real estate projects from imminent collapse, Naredco-UP has sought one-time rollover/restructuring of disbursed project loans.

'Existing project loans from banks and NBFC's be re-scheduled irrespective of NPA status where the projects are commercially viable having positive net worth,' the letter said.

The association has requested the FM to direct banks and other financial institutions to allow fresh project loans as last-mile funding to complete the stalled projects, with a moratorium of one year for principal and interest.

That apart, Naredco-UP has demanded that the government should relax the norms for the Rs 25,000 crore stress fund 'SWAMIH', which has been created to complete stalled projects.

'...due to the rigid terms and conditions of the fund, very few developers only could avail the benefit of the same,' it said.

The guidelines of this AIF-SWAMIH should be amended to provide for sharing of the cash flows with the existing lenders, to the extent that servicing the debt requirements of existing lenders is not termed as default, Naredco-UP suggested.

Instead, it said that necessary instructions should be given to the banks to issue NOC for priority charges in favor of SWAMIH Fund.

'We, as a representative body of real estate developers, draw your urgent attention to the terrible market condition and request your kind consideration for the announcement of policy decisions for the revival of the real estate sector to tide over this unprecedented crisis,' Naredco-UP said. PTI MJH SHW SHW

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