As said on Wednesday, Deepak Parekh, the chairman of HDFC AMC and HDFC Life, banks should be permitted to lend money to developers in order for them to purchase land. He added that supporting fresh initiatives for affordable housing is equally essential.
During the third India Mortgage Leadership (IML) Conclave in Mumbai, Parekh engaged in a fireside chat with Tamal Bandyopadhyay, consulting editor of Business Standard. Parekh stated that developers are currently forced to rely on short-term borrowings from NBFCs and foreign companies that charge exorbitant interest rates of 17–18%.
"They obtain standard construction loans from banks as soon as they acquire the land and begin construction, and then pay back the NBFCs...Why are banks unable to provide loans for land if you want the cost of real estate to decrease and become more affordable? I simply don't get that. It is a safe security, provided you do your title search, provided you ask the developer to put the 30-50 per cent of the land," he exclaimed
Parekh further stated that since the CLSS programme was discontinued, affordable housing has been given less attention than more expensive homes. "We told the finance ministry to continue the CLSS scheme but it could not due to budgetary constraints," he stated.
According to Parekh, developers need to be given some incentives in order to build affordable homes.
"I see very few developers making small, affordable homes today because there is such a high demand for luxury homes," he stated, noting that the majority of Mumbai flat sales are for more than Rs 1 crore. "Those can not be called affordable homes" .
"We need to devise a plan that will encourage developers to take up the construction of 400–500 square foot residences. We are leaving mass janta' behind if not," he declared.
Parekh gave out a positive vibe on the Indian residential sector as a whole. "The state of the housing market is more optimistic than I have ever seen it." According to him, the housing market is flourishing and has increased by 30% from the previous year.
