Indian real estate hope to come back on track after FM assurance for cheaper loans

Today Indian Finance minister P Chidambaram assured real estate developers that government will impress upon banks to accelerate lending to realty, which is facing one of the worst slowdown in the recent times. The step is a result of meeting held with FM and the delegation of builders under the Confederation of Real Estate developers’ Association of India (Credai), to complain against banks’ reluctance to disburse loans to the real estate companies.

As per FM P Chidambaram, government will not only help the Indian real estate sector in terms of providing liquidity but will also work to reduce the present lending interest rates.

 

Due to rise in interest rates which has been increased from 8% to approx 12%, the Indian real estate sector has affected very much and it was facing a adverse demand crunch. As per RBI & government, the rise in interest rates were the effect of speeding realty rates which has creates a bubble thinking between lenders & investors. To keep the better control, RBI has increased the interest rates, tightened the provisioning norms and made loans costlier & tougher to real estate sector.

As a result in hike of interest rates, EMI and tenure of loans has increased which in turns reduce the demand of real estate. At present as the global economy has weakened, the Indian FM has assured the sector player that government will relook the norms and will increase the liquidity in real estate sector as well as will bring down the interest rates on lending.

 

The other relevant details can be grasped from Times of India, Financial Express, Indian Parliament news etc.