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Will the KV Kamath committee report help the real estate sector in debt servicing?

The recent guidelines issued by the KV Kamath committee for 26 sectors including real estate were long-awaited. The experts say these guidelines can benefit the real estate sector.

The real estate sector is liquidity strapped and is befuddled due to the COVID-19 pandemic. Apex bank restructured the parameters based on the propositions given by the KV Kamath committee. The experts foresee a long term benefit of these structural changes.

The weak market conditions have been giving headwinds to the Indian Real-estate market. Hence, it was the right time for RBI to allow the restructuring of personal and corporate loans. One of the biggest sighs of relief was the changes in home loans.   

According to experts, this restructuring will be helpful in maintaining liquidity and serviceability of debt which in turn can help gain buyers’ confidence. 

Ramesh Nair, CEO & County Head (India), JLL said that “For the timely implementation of this scheme, K V Kamath committee has come out with guidelines for 26 sectors including real estate. Being a long-awaited measure, real estate is expected to be a major beneficiary of this.”

To which he added, “This is expected to benefit real estate developers including suppliers of key raw materials to reset their debt and provide a fresh lease of life to service their debt prudently. Also, this will enable corporates to focus on restarting their business in the next normal with renewed vigor and vitality. RBI has done a well-balancing act by covering individuals as well as taking cues from the fact that consumption has been severely hit,” 

Under the chairmanship of Kamath, a panel of the five-member committee was formed by the RBI to consider the recommendations over restructuring the loan parameters. This move came into being after several requests from the loan payers in lieu of the COVID-19 pandemic.

The central bank in their statement told media that “The recommendations of the Committee have been broadly accepted by the Reserve Bank. Accordingly, a follow-up circular to the Resolution Framework guidelines announced on August 6, 2020, has been issued today by the Reserve Bank specifying five specific financial ratios and the sector-specific thresholds for each ratio in respect of 26 sectors to be taken into account while finalizing the resolution plans,”

This move is a great sigh of relief for the developers who have been requesting the RERA to extend the deadline for completion of their projects. Also, residential projects will now be able to attract more buyers. It will be really great to see how this move will help in booming the real-estate sector.

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