By Dr Sanjay Chaturvedi, LLB, PhD
RBI on 17th April 2020 made a statement through its Governor offering various stimulation as well as making statement on economic affairs of the country. This statement is very vital as it was made to clear many doubts on economic recession estimated by many economist.
The Governor stated that the Real Estate Projects which are being developed to be sold in the open market (Commercial aspect of real estate development and not just commercial use of real estate projects) and have taken finance should be given one year moratorium period over and above usual moratorium period of one year given by financiers. The statement further gave leverages to NBFCs to treat this as usual and not debt restructuring of loans which have very wide repercussions including treating as NPA under section 13 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as the SARFAESI Act).
The statement in its para 22 maintains: “In terms of the extant guidelines for banks, the date for commencement for commercial operations (DCCO) in respect of loans to commercial real estate projects delayed for reasons beyond the control of promoters can be extended by an additional one year, over and above the one-year extension permitted in normal course, without treating the same as restructuring. It has now been decided to extend a similar treatment to loans given by NBFCs to commercial real estate. This will provide relief to NBFCs as well as the real estate.”
This will help built the real estate development and give relief to already fund starved industry for lack of slow down in sales.
Sir there is a difference between moratorium and extension in DCCO.
It’s not 1 year moratorium that has been granted.
Dear Jimish
We treat this as Moratorium only because extension to start a project also includes all conditions and which also includes moratorium period to start serving the debt. Hence it is going to end up in Moratorium period only.
this Is for only commercial projects & not residential projects ?
Right sir. Thank you
Sir why only loans take from nbfc only….. many real estate players have taken loans from cooperative and nationalized banks too….. even they should be allowed