Rescheduling Shield For Not Cutting Prices

Many banks have complained to the RBI that builders were capitalising on the recently-extended loan restructuring facility for not reducing sales prices, The Economic Times has reported. RBI has allowed banks to restructure loans to builders without turning them into NPA. Several builders are seeking rescheduling of loans as they are in no position to pay back in time. Builders feel that they can hold on to the current inflated prices, as their short-term liability gets reduced due to rescheduling of loans. Developers have all along been banking on easier loan availability for themselves as well as home buyers to bring the real estate sector back on its feet. But the past few weeks have shown that despite lower interest rates and availability of funding, things are still turning from bad to worse for the sector. Developers must see reason and cut their margins to bring down prices significantly. Unless they do that, buying will not pick up. There is a serious risk that developers’ obstinacy to hold on to high prices may do a significant damage to real estate as well as the larger economy.