Many companies claim that the draft norms recently released by the Reserve Bank of India in terms of lending to real estate projects are likely to hamper the pace of infrastructure development in the country. However, it is hailed as a prudent move from the point of view of long-term sustainability. The provisions proposed to increase the standard asset provision by 5 percent in the case of loans for real projects created a sensation. Commercial banks are planning to write a letter to the RBI on this. Experts in the real sector say that this will become a hurdle for the infrastructure development projects planned by the central and state governments for the next decade.
It is stated that high provisioning will put pressure on bankers, and hence it will not be a priority sector for banks. It is being determined that this will affect the real estate sector. Also, it is said that there is a possibility of affecting the flow of investments and causing delays in projects. However, it is said to be likely to contribute to long-term stability in the real estate sector. It is suggested that these draft regulations should be implemented as per the prescribed time line in view of the fact that the projects undertaken now have started as per the norms.
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