Real estate sector welcomes RBI approval of Kamath panel's debt recast plan

September 9, 2020: The real estate sector, still combating the pandemic blow, says the loan restructuring parameters approved by the RBI based on the recommendations of the KV Kamath committee would help the liquidity strapped industry get some relief.

The committee has listed 26 sectors, including real estate, which require restructuring based on its analyses of financial parameters hit due to the economic crash caused by the Covid-19.

“Financial cushion, as a result of the loan restructuring, will improve cash flows in this liquidity strapped situation, which in turn will help pump in working capital and funds necessary to restart those projects which are stalled or facing a slowdown since a long period,” said Niranjan Hiranandani, president (national) NAREDCO and Assocham.

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The sector, while contributing to the GDP growth, and providing employment, has a multiplier effect on 250-plus allied industries.

Although the restructuring will be at a project level, the initiative will help the sector maintain liquidity, debt serviceability and in turn increase buyers' confidence and ensure faster turnaround in the sector.

Even though top realtors are now seeing green shoots in the residential property segment, sales had dropped 81 per cent in the top Indian cities in the April to June quarter of this year, while new launches had declined 98 per cent. In the office space segment, the top 6 markets of Delhi NCR, Mumbai, Bangalore, Chennai, Pune and Hyderabad have seen a massive decline in absorption.

From nearly 32.3 million sq ft of space absorbed in the first half of 2019, the first half of 2020 absorption fell to 13.7 million sq ft. Similarly, the cumulative supply addition was 13.5 million sq ft in H1 2020, compared to 26.6 million sq ft in H1 2019, according to a Savills India report.

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