Considering the current situation of India’s Real Estate Sector, especially Affordable Housing which has been the focus of development activities in the recent past, and in order to help the sector achieve the targets under the ‘Housing for All by 2022’, it is our humble request to the Government of India to consider the following submissions on the real estate sector
1. Priority on Re-capitalisation of 11 banks under PCA Framework:
The focus should be on Re-capitalization of the 11 PSU banks, under the RBI’s prompt corrective action (PCA) framework. The move will revive the lending activities of all these banks and ease the current financing problem for the real estate sector. While there are discussions around the same. However, this needs to be expedited.
2. Set 5% target for banks to lend either directly or indirectly to Affordable Housing under Priority Sector Lending (PSL) mandate:
Considering the current financing crisis in the Real Estate Sector, especially for the Affordable Housing Segment, the government should consider setting a 5 per cent target for banks to compulsorily lend to “Affordable Housing” segment, either under or in addition, to the overall 40% PSL targets. By 2022, which is the deadline for meeting the PMAY (U) targets of constructing 1 crore urban dwellings, the banks should be able to easily build up a portfolio comprising of 5% of an incremental book for affordable housing. This will be a big move for affordable housing to grow.
In personal taxes, the current cap on tax deduction on housing loans is Rs 2 lakh, which should be revised upwards to at least Rs 3 lakhs.
4. Standardization of GST and Stamp duty rates:
The government should take steps to standardize the rates of applicable taxes, including GST and Stamp Duty, on real estate purchases.
5. Allow Deposit Taking Licence to HFCs with a good track record:
The government should provide a level playing field by allowing Deposit Taking Licence to HFCs registered with the National Housing Bank (NHB) and with a good track record, decent book size, high credit ratings and good asset quality.
[This is an authored article by Ravindra Sudhalkar, CEO of Reliance Home Finance. All views, opinions and expressions are personal and limited to the author.]