Revised RBI norms to hit new launches

with banks becoming more cautious in lending money to developers it is going to be a tough task for those looking to get their projects financed. And even when the finance is arranged the developers will to stick to the completion deadline strictly with little room for delays now due to RERA norms.
Temporary setbacks to the real estate sector had seen total new launches in top nine cities of the country dropping by over 40 per cent in 2017 as compared to 2016. If the Reserve Bank of India’s (RBI) move on February 12 is any cue, new project launches will fall further. The revised framework has specified norms for ‘early identification’ of stressed assets, timelines for implementation of resolution plans and a penalty on banks, for failing to adhere to the prescribed timelines
If you call the NPAs of banks increasing and bankruptcy of several builders a positive impact, then you should be prepared to hear about even more positive news.
Under the new rules, insolvency proceedings would have to be initiated in case of a loan of Rs 2,000 crore or more if a resolution plan is not implemented within 180 days of the default.
Banks will have to report defaults on a weekly basis in the case of borrowers with more than Rs 5 crore loan. Once a default occurs, banks will have 180 days  to come up with a resolution plan. Should they fail, they will need to refer the account to the Insolvency and Bankruptcy Code (IBC) within 15 days.
As soon as there is a default in the borrower entity’s account with any lender, all lenders (singly or jointly) will initiate steps to cure the default.
If strict provisions of the real estate Act were not enough to curtail developers’ enthusiasm about project launches, the fresh RBI move would do the trick.                      — S.C Dhall