Any additional housing loans for stalled real estate projects that are being revived under a dedicated government scheme can be treated as standard loans, the Reserve Bank of India has told banks.
A communication in this regard was sent out to banks last month, people familiar with the matter told ET. The government had in 2019 set up a Special Window for Affordable and Mid-Income Housing (SWAMIH) Investment Fund to help complete stalled housing projects.
The RBI did not respond to queries sent by ET.
A committee headed by the country’s G20 sherpa, Amitabh Kant, had suggested additional loans for borrowers among several measures to revive stalled projects.
“The regulator has said that any additional funding or disbursement of residual parts of the housing loans by banks post-involvement of SWAMIH shall be treated as standard…,” said a bank executive, aware of the communication shared with lenders.
These home loan accounts in stalled projects are currently labelled non-performing loans.
This relaxation would, however, be subject to the condition that the borrower should not have more than two residential properties, including the one financed by the bank in a stalled project.
The above-quoted bank executive said the regulator has made it clear that if the borrower fails to make the payment as per the additional disbursement terms, the account will slip back into the non-performing status as per the existing guidelines.
“Also, if the project is not completed within the timelines as assessed by the SWAMIH Fund while investing in such projects, the asset classification for the additional or residual funding shall be classified as NPA from the date of disbursement,” he said.
The Kant-headed committee in its report on the “Rehabilitation of Legacy Stalled Real Estate Project” submitted late August recommended asset classification relaxation for additional disbursed portions for the existing individual home loan accounts.
The loans should be treated as standard after additional disbursements, the committee suggested.
This is necessary to reduce harassment of individuals whose accounts have been rendered NPA for no direct default, it noted.
As per the committee’s report, the Indian Banks’ Association has estimated that 4.12 lakh stressed dwelling units involving Rs 4.08 lakh crores are stuck in stalled projects.
In its recommendations, the committee made a case that the financing for completing the projects may be treated as priority financing. It is further proposed that banks be permitted to finance fresh housing loans for new buyers who purchase unsold inventory of these projects.
