Reaction of MCHI on RBI’s provisioning norms for commercial property

Maharashtra Chamber of Housing Industry (MCHI) has expressed

its concern on the Reserve Bank of India (RBI) announcement to

revise the provisioning norms from 0.40 to 1 per cent for loans

to the commercial real estate sector, as the commercial property

construction and IT/ITes spaces have just started signs of revival

after a long lull.

Commenting on the RBI’s move, MCHI Secretary 

Mr. Mayur Shah said, “RBI’s move could be detrimental

at the time when the commercial and IT construction have just

started to move up after a long interval. Though, the impact of

the RBI move would be marginal for the developers who enjoy

good credit rating, it would give negative signals to the industry

as a whole. It would also push up the cost of the commercial

construction and escalate the prices further.

Mr. Shah, who is also the Managing Director of the 

Marathon Group further, said,

“We the members of the MCHI urge the central

bank to reconsider the proposed move, in the

overall interest of the industry. To achieve the

economic growth, we will need world class

commercial/IT spaces and retail spaces, so

discouraging the development of commercial real

estate shall be detrimental to overall economic growth.

Also, Banks are only funding for the construction finance

and not land acquisition so asset bubble fear is out of

place at this time”.