CREDAI plans to reset the interest rate along with rescheduling debt repayment.

Against the backdrop of the Coronavirus outbreak and its effects on the economy, the body of real estate developers, the Confederation of Real Estate Developers’ Associations of India (CREDAI), seeks to delay the debt repayment scheduled for the next 3 months and to be permitted to recover in installments over the next 12 months.

The developers’ body has also recommended a re-fixing of the interest rate on all real estate sector loans at the repo rate on which banks borrow from the Reserve Bank of India (RBI). This has assured the government that the benefit will be passed on to the consumers.

Besides other suggestions, CREDAI has proposed to use Rs 1 lakh crore lying in the Building and Other Construction Workers’ Welfare (BOCW) Cess Fund raised from developers to provide wage losses and health benefits for construction staff.

“As cash flows are impaired due to the financial crisis, buyers are unable to fulfill commitments, additional funds from financial institutions are expected to cover rising costs under the same conditions when current loans and without excessive collateral,” CREDAI said in a statement.

It also suggested that COVID-19 should be classified as ‘force majeure’ under Section 6 of RERA, which offers an extension of the registration of projects given to promoters. CREDAI also tried to increase the completion date and exemption of fines by one year under the RERA.

Considering the current scenario of no cash inflow for real estate, the central bank’s Special Mention Assets Classification for deferred payments needs to be held in abeyance or revised such that delays in repayments are not to be reported for the first 90 days, CREDAI said while adding that benefits under their insurance cover could be allowed by treating COVID 19 as force majeure.