The Reserve Bank of India's (RBI) conservative policy on bank lending to the real estate is affecting the sector as availability of funds is becoming a serious concern, industry experts said.
"The real estate situation today is quite serious. The availability of funds is restricted. If this is the atmosphere, how can we expect people to invest in this sector. Another challenge is that the availability of debt has reduced. The RBI has restricted banks to give loans to the real estate sector," Piramal Group Chairman Ajay Piramal told reporters on the sidelines of a summit here today.
Private equity lenders are also cautious while lending to the sector, he said.
"The cost of private equity funds is high, which is another major concern for us. If they don’t get 30% return on their investments, they will not invest as they feel the risk is high. So the main problem is availability of funds," he said.
Apart from availability of funds, regulatory permission is also emerging as a serious cause of concern for the industry, he said.
"We are facing a few regulatory problems especially in getting permissions for our projects. The government and regulatory authorities must realise that giving quick permission is in the interest of the consumers. The delay would only result in shortage of house stock," he said.
