The RBI's decision to cut key rates and give three-month moratorium on all term loans will boost liquidity and ease debt pressure, provided banks pass on these benefits to customers quickly, according to property developers and consultants.
The RBI’s decision to cut key rates and give three-month moratorium on all term loans will boost liquidity and ease debt pressure, provided banks pass on these benefits to customers quickly, according to property developers and consultants. The RBI cut repo rate to 4.4 per cent and reduced the cash reserve ratio maintained by the bank by 100 basis points. The reverse repo rate was cut by 90 bps to 4 per cent.
Commenting on the development, CREDAI Chairman Jaxay Shah said, “The economy is going through hard times. The decisions by RBI Governor today is a much awaited comprehensive package to ease the burden of all financial classes across the nation.” “We are assuming that the moratorium covers all home loans, auto loans and personal loans of any nature. It’s very important that the hard working tax paying middle income segment of our society is provided this flexibility,” he added.
NAREDCO President Niranjan Hiranandani said the RBI’s move to pump fresh liquidity in the system will certainly help to mitigate the stressed cash flow and debt pressure in the economic system. “The success to masterstroke announcement by RBI will be in quick transmission of these liquidity tools down the line to uplift the appetite among the India Inc to notch up the economic revival,” he added.
Anarock Chairman Anuj Puri said RBI’s move will push credit flow into all industries reeling under the impact of the coronavirus. “Given this time period, RBI will ensure that the benefit of the rate cut is directly passed on to actual consumers, which could eventually translate into more home loan takers,” he said. The moratorium of three months of EMIs on all outstanding loans will be a major relief to all concerned stakeholders.
“All in all, this big-bang announcement by the RBI will benefit all industries, and is undoubtedly the most convincing intervention yet to tame a major economic crisis in the country,” Puri said. Anshuman Magazine, Chairman & CEO – India, South East Asia, Middle East & Africa said, “RBI is in a mission mode to nurture the market, preserve financial stability and the timing here is crucial.”
The decision to defer installments of all term loans by three months will provide the necessary support to homebuyers as well, he added. JLL India CEO and Country Head Ramesh Nair said the reduction in key interest rates will encourage banks to resort to enhanced lending to productive sectors of the economy at a time when growth of credit is slowing down. “It is important for immediate transmission of these rate cuts to the home buyer which will boost consumer sentiment,” he added.
The injected liquidity of Rs 3.74 lakh crore along with the three-month moratorium on all term loans by financial institutions will alleviate short-term liquidity concerns and help developers as well as home buyers survive in these uncertain times, Nair said. He said that total outstanding loans of real estate developers from commercial banks, NBFCs and HFCs is estimated to be around Rs 4.5 lakh crore as of March 2020.
The moratorium will definitely benefit homebuyers as these financial institutions have lent an estimated Rs 20 lakh core as of March 2020, he added. Knight Frank India CMD Shishir Baijal said the apex bank has checked all the required boxes of rate cut, liquidity infusion and moratorium. “These steps will help the economy to stay stable despite the lockdown and economic disruption,” he said.
Dhruv Agarwala, the CEO of PropTiger and Housing.com, said, “This will go a long way in reducing the massive pain being felt in all parts of the economy and especially in the rate sensitive real estate sector. The RBI has shown its decisive intent to mitigate what could have been a severe economic fallout of the coronavirus pandemic.” Gaurs Group MD Manoj Gaur said the home loan rates should fall by 90-110 basis point. “For the sake of Indian economy, RBI must ensure proper transmission.”
Supertech Chairman R K Arora said the move would provide momentum to the property market and boost the economy. Nayan Raheja, Executive Director, Raheja Developers said the interest on home loans may fall down to around 7 per cent, which augurs well for the real estate sector.
Rohit Gera, MD, Gera Developments, said, “The reduction in interest rates will ease the burden on individuals and businesses as would the moratorium.” Avneesh Sood, Director Eros Group, hoped that the banks would pass on the benefit, lowering the interest cost of both developers and home buyers.
Mumbai-based Ekta World Chairman Ashok Mohanani said, “Today’s announcement infused some assurance in the mind of the panicked citizens that the economy will revive back in the short run.” Bhutani Infra CEO Ashish Bhutani said: “From reduction of rates to infusion of liquidity to moratorium on loan repayment, the measures will help both individuals & organizations to cope up with the current situation.”
Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory said, “We believe that the banks will finally be passing the benefits of the current & previous rate cuts to the customers. This will reduce the borrowing cost for the home-seeker significantly and have a positive impact on real estate.”
The moratorium on EMIs will help in managing through the current crisis, said Ankush Kaul, President (Sales & Marketing), Ambience group. Poddar Housing MD Rohit Poddar said, “We welcome these measures as without them the economy will go into deflation.” Sushma Group ED Prateek Mittal said the home loan rates will fall sharply, which will boost housing demand when situation normalises.
This is a major step to improve liquidity conditions, cheer growth and safeguard financial stability, said Ashish Sarin, CEO, AlphaCorp. Honeyy Katiyal, founder, Investors Clinic, termed these steps as “the need of the hour” to boost the realty sector and overall economy.