KOLKATA: National Housing Bank, or NHB, has said it has begun the search for stalled housing projects that can turn viable with fresh dose of financing, acting on a government directive to support such projects after restructuring the accounts. Many housing projects across states got stuck due to funding gap as a result of slower economic growth. The government has told banks to focus on such projects to unlock their value.

"The government wants bank funding for the housing sector, which has the potential to spur economy with its multiple linkages," NHB chairman and managing director RV Verma said.

NHB is primarily looking at smaller towns like Bhopal, Coimbatore and Meerut, which are known as business hubs. "Many residential real estate projects are stuck midway because of insufficient funding," said Verma. "These projects can be turned viable if they get fresh bank loans. Our job is to facilitate this," he said.

NHB will coordinate with builders, asses project viability and facilitate bank funding after restructuring accounts. Lenders, in turn, have requested the government for a favourable asset classification norm. The government may take up this issue with Reserve Bank of India to encourage fresh lending to the sector.

According to prudential norms, if a project fails to become operational in two years after the proposed deadline (as scheduled while sanctioning loan), banks have to classify the project as non-performing. But real estate developers said that in many cases, banks have not funded the projects fully and, therefore, the loans should not be billed as NPA as the loan cycle has not been completed.