The construction sector contributes 8 per cent of the GDP and provides employment to some 40 million people in the country.
New Delhi:
In order to provide breather to construction sector, the Reserve Bank is likely to come out soon with detailed norms for one-time settlement of loans in line with the Cabinet decision.
-"The guidelines for one-time settlement scheme for stressed sectors are almost ready barring some fine-tuning. They should be out any moment,-" sources said.
The detailed guidelines should be out within next 8-10 days sources said, adding that it could have benefits in terms of relaxation in debt payment timelines or lowering of provisioning requirement. They will be anchor guidelines for all debt ridden sectors including construction and real estate, sources added.
Banks' exposure to the construction sector stands at over Rs 3 lakh crore, and 45 per cent or Rs 1.35 lakh crore of the loans are under stress. Overall, gross NPAs of the public sector banks have surged from 5.43 per cent (Rs 2.67 lakh crore) in 2014-15 to 9.32 per cent (Rs 4.76 lakh crore) in 2015-16.
There could be separate norms which could be with regard to relaxation of margin money requirement for bank guarantees for the construction sector, among other things, sources said.
Earlier this year, the Cabinet had approved an array of measures including easing of rules for quicker settlement of disputes, pump in liquidity and reinvigorate stalled projects with the objective to revive construction and real estate sectors.
It was also decided that Department of Financial Services in the Finance Ministry and the Reserve Bank of India (RBI) will consider giving one-time scheme for stressed bank loans in the sector.
The government had also proposed to form a conciliation board in all new construction projects. The construction sector contributes 8 per cent of the GDP and provides employment to some 40 million people in the country.
The cabinet had also approved a NITI Aayog proposal related to the construction sector that seeks to eliminate bottlenecks for projects where contractors are fighting a legal battle with government agencies.
Under the proposal put forward by NITI Aayog and approved by the Cabinet Committee on Economic Affairs, the government agencies would pay 75 per cent of the arbitral award amount to an escrow account against margin free bank guarantee, in those cases where the award is challenged.
