Government likely to dedicate scheme to unburden NBFCS of stress assets to boost Real Estate Sector


Status as on- 08/02/2020

Relief measures are likely underway to assist NBFCs and the real sector from their stress assets. The Central Government has already sponsored INR 10,000 Crore and set up an INR 25,000 Crore Alternative Investment Fund which will provide priority debt financing to the affordable and middle-income housing sector. Further, measures are currently underway to address liquidity and credit crunch in the economy.

The government is presently mooting schemes to unburden NBFCs of stressed financial assets such as by creating a stressed asset fund to buy out the stressed financial assets.


To prevent any potential housing crisis and to boost the economy the Finance Ministry and the Prime Minister’s Office has mooted to the RBI to;

  • Permit banks to decide not to classify default or Special Mention Accounts;
  • Empower Banks to make commercial decisions permitting one-time recast of selective real estate companies’ loans which are in advance stage of construction but have been stalled due to repayment issues.

Banks are presently hesitant to allow one-time recast as it requires such loans to be classified as Special Mention Accounts, which further impedes real estate developers from approaching funding agencies and the market for raising funds as it casts doubts on the Real Estate developers.

CREDAI and NAREDCO are also supportive of such a move as it is a viable option for meeting the liquidity gap.

How do Buyers Benefit

Empowering Banks to refrain from tagging real estate companies’ loans as NPA or Special Mention Accounts shall provide real estate companies access to hurdle free funding. A onetime recast of the loan shall benefit projects stalled at advance stages to complete on time. 

RBI permitting such a proposal which grants banks the ability to make commercial judgments on real estate projects on a case by case basis shall help boost the real estate sector which as per a recent internal survey showed over 4.58 Lakh units are presently stuck with over 1,600 projects stalled. 

Such a proposal is in addition to the PMOs Special Window Stress Fund assets that shall under the management of SBICAP Ventures provide priority last-mile debt financing to real estate projects that are stalled due to lack of construction funds. 

This move is in line with the increased efforts by the Prime Minister’s Office, the Finance Ministry and the RBI to boost the real estate sector given its key role as a multiplier in the economy. 

Disclaimer– The above article is based on the personal interpretation of related laws, which may differ from person to person. The readers are expected to take expert opinion before relying on this article. For more clarification, the readers can be expected at  

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