Financially sound non-bank financial companies (NBFC) and housing finance companies (HFC) could be in the next row to allow for the extension of the commercial operations start date (DCCO) of project loans for commercial real estate. another year without a downgrade the asset classification.
Official sources said the Reserve Bank of India (RBI) extended this tool to banks after the recently concluded Monetary Policy Committee meeting on February 6 and NBFC and HFC could now be included in the system to allow for the completion of a larger number. of vital subjects real estate projects delayed for reasons beyond the will of the promoters.
The move will not only bring NBFC and HFC on par with banks in the treatment of loans granted for the renovation of real estate projects without reducing the classification of assets, but will also provide great relief to both commercial and residential real estate projects that have been delayed due regulatory issues.
It can be offered to companies such as LIC Housing Finance, PNB Housing and Shriram Finance which have remained substantially unaffected by the current liquidity crisis in the sector following problems in IL&FS and DHFL.
According to RBI, commercial real estate (CRE) refers to all classes of real estate assets such as the construction of commercial buildings, IT buildings and even residential structures for which banks have lent to developers.
According to brokerage firm Emkay, the proposed extension of DCCO to NBFC and HFC will have limited impact on the sector, as very few existing NBFC / HFC projects have opted for the one-year extension provided by the RBI.
However, this may have a positive impact on NBFC / HFC share prices which have come under some delayed pressure.
The planned extension of the structure to NBFCs and HFCs may not be an unlikely move by the RBI as the previous circular on the same changes was first made available to banks and was subsequently extended to NBFC / HFCs.
Banks and NBFC / HFC already have a one-year extension window available (based on the 2015 circular) for all CREs; however, the recent announcement after the MPC meeting offers banks an additional one year period, which is not currently available for NBFC / HFCs.