Real Estate Sector should form their own NBFCs for running business: Nitin Gadkari

Union Minister for Road Transport & Highways and Micro, Small and Medium Enterprises (MSME), Nitin Jairam Gadkari has urged Indian real estate developers and their associations to form their own non-banking finance companies (NBFC)s to support their businesses.

?Automobile companies like TATA, Mahindra, Ashok Leyland could operate their own finance companies to run the business and tackle liquidity crises. Even associations should form their own NBFCs to support the businesses. This will help developers to provide cheaper loans to homebuyers with faster approvals,? said Gadkari.

The minister made this suggestion while addressing a webinar organised by the self-regulatory body, the National Real Estate Development Council (NAREDCO) on Wednesday.

The minister further added, ?The real estate industry should adopt new technologies and reduce their construction cost, which will help the sector to generate more demand and sell inventory at lower cost.?

Addressing over 1,500 participants, Gadkari suggested that the central and state government were planning to purchase homes for their employees on a large scale and if associations could come forward with sound proposals to the government, it would not only provide the developer with access to liquidity but also help the economy. ?NAREDCO should propose the government for investing some amount in NBFCs and ask NBFCs to borrow foreign funds, which will help in reducing interest rates,? he said.

Pointing out the many opportunities that existed in development of logistics parks, smart cities, smart villages, cold storage and road construction, Gadkari urged the developers to come up with some innovative idea to kickstart economic activity. Commenting on the relief package being sought by the housing sector, he observed, ?The government is already in the process to provide relief package for the sector. If NAREDCO has some suggestions they must be put before the government.?

Thanking the minister for his comments, Dr Niranjan Hiranandani, National President, NAREDCO observed, ?Construction and real estate provides employment to around 15 per cent of the labour force in India, contributing nearly 8 per cent of India?s GDP. His suggestions will definitely take the share to a higher number.?

Rajan Bandelkar, President, NAREDCO, Maharashtra, said, ?After the agriculture sector, the construction industry is the second sector to generate employment opportunities. We urge the government and financial institutions to reduce the home loan rate to provide additional buying power to the consumer.?