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“Banks Giving Less and Less Money to Real Estate Sector”
The Economic Times  |  July 29, 2019

ET Magzine

Niranjan Hiranandani has been heading the National Real Estate Development Council since September 2017. In an interview to ET Magazine, co-founder of the Hiranandani Group says there is a need for more banking licences to solve the liquidity crisis. Edited excerpts:

 

Will IBC be able to resolve real estate insolvencies and revive the sector?

 

Currently, the situation is complicated. It is not just the IBC. A homebuyer has many options and can approach the consumer court or RERA [Real Estate Regulatory Authority]. Today, we have different customers and lenders approaching different authorities. If we can focus on one, it will be easier to find a solution. I think RERA should tackle this since it is designed for real estate and the problems homebuyers face. IBC, on the other hand, is designed to return money to lenders.

 

How do you see the current liquidity crunch?

 

In the last three years, we have seen banks giving less and less money to real estate. Funding is not available to the sector and because of this, the oil in the economy is drying up. We have to be clear: this is not an issue of liquidity only for the real estate sector. We have to seek a solution so that the banks start to lend more.

 

What can be the solution?

 

The Reserve Bank of India will surely try to bring in more liquidity into the market through the banks and non-banking finance companies. I also feel more banking licences should be given out and there should be more nimble-footed but strong private sector banks that can then lend to small and medium enterprises and real estate developers.