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How Nbfcs Are Helping Revive A Failing Real Estate Sector
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You always wondered what NBFC is all about? Even if you did know about NBFC, you could not grasp how the company helps real estate in India? We are going to present some simple facts that will make you understand real estate NBFC a little better.
Huge changes were bought into effect by the end of 2016. The changes that were implemented were through demonetization, Good Service Tax and the Real Estate Act. This caused an upheaval among the construction sector and hampered the rampant progress in India’s real estate sector.
To help the real estate sector get out of the fragile situation, the government encouraged affordable housing schemes to prevent real estate further loses. Unfortunately, it did not do much good to the already fledging sector. Surveys have shown that sales have been sluggish when it comes to purchasing the property.
Through the midst of such crisis, big lenders are looking at means where they can lower the risks. This causes more problems to the real estate sector as there are not many who would like to loan huge amounts as they did when the markets were on an upswing.
This is where non-banking finance companies (NBFCs) have played a major role. They constantly strive to provide and lend loans to such real estate projects to keep the projects afloat. Recent reports have suggested is that out of the 4 lakh crores lend to real estate sector, 1.8 lakh crore is been lend by banks whereas the remaining amount has been lend by the NBFC. This happens to be a cause for concern as India’s real estate is sitting on close to 0.5 million of unsold property.
NBFCs have claimed that more money is been pumped in to ensure that the sale of unsold property takes place. It should be noted that the amount of efforts that are been taken by NBFC is commendable. They have been instrumental in improving the economy of the real estate sector.
The NBFC in India has grown leaps and bounds because even though the economy is sluggish. In terms of profitability, NBFCs are faring much better than the banking sector. This is primarily because of lower costs. This plays a huge factor in lending them loans at a cheaper interest rate. This has caused a huge amount of potential lenders opting for loans from NBFC.
To facilitate a developing country like India, NBFC constantly ensures to lend money to infrastructures that help contribute the growth of Indian economy. The money given is large sums and their profits are only yielded over a period. Banks refrain from lending to such constructions as they tend to be risky. For this reason, NBFC carries more popularity as they are ready to bear the risk.
Summing up the advantages of NBFC, it aids the economy in the following way; It assists in the improvement of financial markets. It is a great way of mobilizing resources as it converts savings into investments. The important factor is that it also generates employment. Finally, it helps to break the poverty circle by serving as a great instrument to help the government.
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