MUMBAI: Non-banking finance companies (NBFCs) can extend the date for commencement for commercial operations (DCCO) by a year, in the case of loans provided to commercial real estate projects which have been delayed for reason beyond the control of promoters.
Announcing a slew of liquidity and regulatory easing steps on Friday,RBI Governor Shaktikanta Das said that the extension can be made without treating the process as restructuring.
Das noted that the move will bring relief both to the NBFCs and developers,
"The date for commencement for commercial operations (DCCO) in respect of loans to commercial real estate projects delayed for reasons beyond the control of promoters can be extended by an additional one year, over and above the one-year extension permitted in normal course, without treating the same as restructuring. It has now been decided to extend a similar treatment to loans given by NBFCs to commercial real estate," he said.
Sector experts have applauded the move and have described it as a "much needed" relief.
"This is indeed a big move and will bring much-needed relief to cash-starved developers. It will help in easing out time for maintaining and managing cash flows for these developers," Anuj Puri, Chairman of Anarock Property Consultants.
Piyush Gupta, Managing Director, Capital Markets at Colliers International India said that the decision will help developers in management of cash flow and curb stressed assets in the realty sector.
"There have been specific mention of lending to Real Estate Sector by NBFCs which reflects increased focus of the regulator on this sector. Developers now have additional one year to repay lenders which is over and above one year available so this will help management of cash flows and reduce asset classification stress of Real Estate focused NBFCs," Gupta said.
April 17, 2020