With the onset of RERA rules and regulations, it has become very difficult for the small and medium scale developers who were present in the real estate sector, to raise funds and capital for their ongoing as well as new projects and almost 75% of the new projects have been shelved or dropped.
There is severe fund/cash crunch in the market, where even the leading builders are finding it difficult to manage their funds, whereas, the others are unable to even complete the ongoing projects.
The Banks may also demand RERA approval for all new projects for home loans and the violators or illegal structures (new ones) may not be able to get home finance. But, There are few financial institutions, which are more willing to lend money to illegal or unauthorized structures even without RERA approval.
Another major blow is that the Income Tax department is scrutinizing all the major bank deposits between Rs.2.5 laks to Rs.1 crore. This scrutiny has further affected the cash flow requirements of the small and medium class builders.
Only, the BIG FISHES may survive at this juncture.