Government mulls mechanism to complete stuck housing projects; banks willing to invest
Since the same formula can not be applied to every project, the government is considering two models for execution of the pending projects. Under the first model, it will consider a plan to be able to extract the cost of executing the project by commercialising its extra floor area ratio (FAR) or common area. Such projects will be listed in a separate list.
In a bid to provide some oxygen to stuck housing projects gasping for air, the government has started working on a new mechanism to help them complete these projects. A source close to the development has informed Zee Business' Prakash Priyadarshi that banks are ready to invest in projects where 60-70 per cent work has been accomplished and there is an assurance of recovery.
Secondly, the banks are interested in investing in those projects where the National Buildings Construction Corporation (NBCC) or some other public agency is roped into to complete the project. NBCC is reviewing the viability of these projects.
Since the same formula can not be applied to every project, the government is considering two models for execution of the pending projects. Under the first model, it will consider a plan to be able to extract the cost of executing the project by commercialising its extra floor area ratio (FAR) or common area. Such projects will be listed in a separate list.
Under the second mechanism, the government will utilise the land bank of the developer to extract the cost of the project. The mechanism will be used in such projects, where builders/developers have taken maximum money from the buyers, and there is no scope to increase the FAR. These projects will be listed in a different list.
According to sources, NBCC has so far reviewed five projects, and is likely to submit a deadline for the same to its buyers after completing the process of identifying such projects. However, the creation of extra floors or towers in the same project may lead to a reduction of common area like parking space, park and club, but the buyers will get their homes at the earliest.
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NBCC will be presenting the proposal during its meeting with the finance ministry and other stakeholders, the sources said, adding that these measures may help the government to bring the industry back on track.
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