Grappling with shortage of funds in the housing and realty sector, builders today sought the Reserve Bank's intervention to prompt banks to reduce margins on their home loans besides ensuring adequate credit flow to the housing segment.
At a meeting with the Reserve Bank in Mumbai, builders are understood to have demanded 'more measures' from the central bank to provide relief to the cash-starved realty sector through proactive actions from banks.
"Banks are reluctant to a extend loans to buyers and construction companies. Also the margins are higher. These concerns have been conveyed to RBI in the meeting," Orbit Corporations' chairman and managing director Punit Agarwal told PTI.
With the banks turning more risk aversive in the face of rising bad loans in the system, many lenders have increased margins on home loans significantly affecting the ability of small home borrowers to secure credit, Agarwal said.
Leading realty player, Hiranandani Group's chairman, Niranjan Hiranandani, said the recently announced special housing package for loans up to Rs 20 lakhs (Rs 2 million) has contributed little to minimise the woes of builders as the scope of the scheme is limited in big cities like Mumbai.
"The package is definitely a welcome move. But there is need for more measures to stimulate demand in big cities like Mumbai, where the real estate prices are comparatively high," Hiranandani said.
More than 10 leading developers met a group of top RBI officials, comprising executive director of the apex bank, in Mumbai on Tuesday to discuss the prevailing issues in the industry.
