To Increase the Sales, the Lending Norms Must be Relaxed: NITI Aayog
Jan 14, 2019 Legal Guidance
The real estate sector has not seen the sales surge that was expected after the demonetization and cutting of the interest rates. The sales in the sector were even affected by the introduction of new rules and regulations. Introduction of RERA was aimed at giving the buyers a one-stop solution to all their grievances. Even it couldn’t impress the buyers to take a plunge in the real estate sector. The confusion among the buyers and the developers regarding the GST tax implications and norm are surely not helping the buyers or the sector as well.
The National Institute from Transforming India (NITI) Aayog mentioned a certain way in which the government can improve the sales in the sector, in their newly released document. They stated that there must be a subcategory under the Priority Sector Lending (PSL) for the affordable housing segment.
Under the Priority Sector Lending (PSL) category, the sectors that contribute to the broader interest of the economy, like the real estate, are eligible to get the funds. The banks have to extend a certain portion of their adjusted net credit as the loan for such sectors.
In June 2018, the Reserve Bank of India mentioned that the home loans of up to Rs 35 lacs would qualify for the benefits of PSL in metro cities. For the centre, the cap was increased from Rs 20 lacs to Rs 25 Lacs. It was also mentioned that the home against which the home loan is taken should not exceed Rs 45 lacs in metro cities and Rs 30 lacs in other cities.
In the document, the NITI Aayog also mentioned that there should be the relaxation conditions for the bank loans which include increasing the cap of Rs 10 lacs that is given to the developer under the Pradhan Mantri Awas Yojana (PMAY). It is also suggested that the cap of Rs 2 lacs that is provided for the maintenances of the houses in the centre should be increased as well.
The document released by NITI Aayog also mentioned that the projects that are carried out by the government should focus on the life-cycle cost approach of the project rather than the cost per square foot approach to bring down the cost. The document also cited that as many lands are lying idle with the public sector undertaking, shall be used for the affordable housing projects.
The National Institute from Transforming India (NITI) Aayog mentioned a certain way in which the government can improve the sales in the sector, in their newly released document. They stated that there must be a subcategory under the Priority Sector Lending (PSL) for the affordable housing segment.
Under the Priority Sector Lending (PSL) category, the sectors that contribute to the broader interest of the economy, like the real estate, are eligible to get the funds. The banks have to extend a certain portion of their adjusted net credit as the loan for such sectors.
In June 2018, the Reserve Bank of India mentioned that the home loans of up to Rs 35 lacs would qualify for the benefits of PSL in metro cities. For the centre, the cap was increased from Rs 20 lacs to Rs 25 Lacs. It was also mentioned that the home against which the home loan is taken should not exceed Rs 45 lacs in metro cities and Rs 30 lacs in other cities.
In the document, the NITI Aayog also mentioned that there should be the relaxation conditions for the bank loans which include increasing the cap of Rs 10 lacs that is given to the developer under the Pradhan Mantri Awas Yojana (PMAY). It is also suggested that the cap of Rs 2 lacs that is provided for the maintenances of the houses in the centre should be increased as well.
The document released by NITI Aayog also mentioned that the projects that are carried out by the government should focus on the life-cycle cost approach of the project rather than the cost per square foot approach to bring down the cost. The document also cited that as many lands are lying idle with the public sector undertaking, shall be used for the affordable housing projects.
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