RERA, Lender's Perspective: Obstacles and Mitigation

The Real Estate Regulation and Development Act, 2016 (Rera) came in at a time when the banking industry was, and continues to be, in turmoil. Non-Performing Assets (NPAs) have touched record highs, having jumped from Rs. 2,63,372 crores in 2013-2014 to Rs. 7,76,087 crores by September 30, 2017. Even safe havens such as the affordable housing sector are falling apart. Delinquencies in the sector are on the rise. Worse, most of the affordable housing loans are below Rs.  2,00,000. For their recovery, the recently enacted Insolvency and Bankruptcy laws will be of no use. The real estate sector is headed for a full blown sub-prime crisis. Unfortunately, the woes do not end here.

Rera was accompanied by Demonetization, and The Goods and Service Act, 2017; none a good bellwether for the last quarter, nor for the New Year. However, the most dreaded of all is the projected 6.5% growth in Gross Domestic Product (GDP). Now here is a look at how Rera impacts lenders, and how it