In a bid to infuse liquidity into the system and accelerate the economy reeling under the Covid-19 crisis, the Reserve Bank of India (RBI) today announced several measures which, besides easing the liquidity concern of banks, NBFCs and other financial intermediaries, will also give a boost to the real estate sector.
“Among the various measures announced, commendably its allotment of Rs 10,000 crore to National Housing Bank, is a big move for the real estate sector reeling under the liquidity crisis. It will help provide capital to HFCs and eventually provide major relief to developers battling liquidity issues in COVID-19 times,” said Anuj Puri, Chairman, ANAROCK Property Consultants.
Further, a window of Rs 50,000 crore under TLTRO will provide incremental liquidity to NBFCs, MFIs, which could be utilised for onward lending to the real estate sector. RBI has also reduced the reverse repo rates by 25 bps to 3.75%. This is another big step as the rate cut will definitely send out positive signals in the current times, and will enable banks to lend more.
In another major relief to developers, the RBI has further extended the date of commencement of commercial operations (DCCO) of project loans for commercial real estate projects which are delayed for reasons beyond the control of promoters. “This is indeed a big move and will bring much-needed relief to cash-starved developers. It will help in easing out time for maintaining and managing cash flows for these developers,” informed Puri.
Developers feel that after the extension of the nationwide lockdown in view of the Coronavirus pandemic, some slowdown in the economy was inevitable. The real estate sector, among others, will also not remain immune to the challenge and hence the industry was looking forward to concentrated efforts by the government.
“In this regard, the industry welcomes the recent steps by the government to bolster liquidity, build credit capacity & offer financial incentives. As the government has pledged to refinance the NBFCs, roll out stimulus packages for NHB, NABARD & SIDBI, etc, this will boost the liquidity in the market & also offer credit support to the realty sector. Also, the decision to allow NBFC to extend realty loans by a year under certain circumstances will give some relief to the sector,” said Ankit Kansal, MD & CEO, 360 Realtors.
Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com, said, “The various measures announced by the RBI to maintain liquidity in the system and ease the flow of credit, including reducing the reverse repo rate by 25 basis points, will help ease some financial stress in the system. This move by the RBI will hopefully nudge banks to increase lending to various sectors of the economy, which is the need of the hour.”
Developers say that infusion of liquidity in the market is of utmost importance and the latest announcement will definitely help the economy. “This time the RBI has addressed the realty sector too, which is a clear indication that the government understands the importance of the second largest employer in India. All the economic machinery has to work together to make sure the country comes out of this conundrum as soon as possible,” observed Pradeep Aggarwal, Founder & Chairman, Signature Global, and Chairman, National Council on Affordable Housing, ASSOCHAM.
Welcoming the announcements made by the RBI Governor today, Uddhav Poddar, MD, Bhumika Group, said, “RBI has taken these measures as they realised that despite lowering of rates, banks were only lending to large corporates and not to mid size and small businesses or to real estate. Hence, RBI has provided liquidity to NBFC’s which mainly service the mid and small businesses and the real estate sector. Real estate is a capital-intensive business and needs liquidity infusion and we hope this and more steps from the RBI will prompt banks and NBFCs to provide the required liquidity in the sector.”