Residential projects to be modelled on credit rating
The Modi government has been working on measures to make affordable housing available for all. To boost this move, there is one thing which can be done. The real estate developer gets a bank loan based on the credit rating of his residential project and if his credit rating is good, then the bank will give the loan to the developer without much hassles which means that the cost per unit for the buyer will come down.
If the recommendations of a committee appointed by the Finance Ministry to devise the rating mechanism for the builders are accepted, then this could become a possibility soon. The National Housing Bank (NHB), in association with credit rating agencies Crisil and Care Ratings, plans to develop a credit rating model for housing projects based on the track record of the developer,his project execution capability, and transparency in legal approvals.
Revati Kasture the Chief General Manager & Head of Research and Grading Services, Care Ratings mentioned that since the bank finance are difficult to procure, the real estate project developers depend on high-cost informal sources of financing. This increases the overall cost of the project which is levied on the buyer.
She mentioned that if the proposal to grade housing projects on a scale of 1 (lowest rating) to 7 (highest rating) is accepted by the banking regulator and the Finance Ministry, then banks will have more comfortable to issue loans for the projects. The end buyer will be benefitted and the real estate sector will get a positive boost as the sales will increase.
Source- The Hindu Business Line
banking regulator and the Finance Ministry, high-cost informal sources of financing, housing projects on a scale of 1 (lowest rating) to 7 (highest rating), Modi government, National Housing Bank (NHB), real estate project developers, Real Estate Sector, Revati Kasture the Chief General Manager & Head of Research and Grading Services
