RBI rate cuts, 3-month moratorium on loan EMIs will boost real estate, say developers

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Published: March 28, 2020 3:58:00 PM

The RBI move has been widely hailed by industry experts and developers, who say that this step will effectively benefit real estate as well as homebuyers.

rbi, rbi rate cut, repo rate cut, 3-month moratorium on loan EMIs, real estate, developers, home buyers Developers have welcomed the RBI move as an important step in the right direction.

In a bid to counter the Coronavirus fallout as well as push credit flow into all industries reeling under its impact, the Reserve Bank of India (RBI) on Friday slashed the repo rate by 75 bps and also announced a 3-month moratorium of EMIs on all outstanding loans.

The RBI move has been widely hailed by industry experts and developers, who say that this step will effectively benefit real estate as well as homebuyers.

“Given this time period, the Reserve Bank will ensure that the benefit of the repo rate cut is directly passed on to actual consumers, which could eventually translate into more home loan takers. Additionally, this move will encourage banks to lend more and also enable industries to borrow,” said Anuj Puri, Chairman, ANAROCK Property Consultants.

The moratorium of 3 months of EMIs on all outstanding loans will be a major relief to all concerned stakeholders, including home loan borrowers and developers. “Developers will now get a breathing space to get their financial act together, at least for now. Moreover, the fact that non-payment of EMIs will not cause loans to turn bad is a major relief,” added Puri.

Developers have welcomed the RBI move as an important step in the right direction.

Pankaj Bansal, Director of the M3M Group, said, “The need of the hour was to take care of the economic pandemic also in addition to taking care of the health pandemic. The comprehensive measures announced by the RBI along with the fiscal measures by the government will impart financial stability as well as strengthen the sentiment across sectors, including real estate, in the wake of the Covid-19 pandemic. A substantial cut in repo rate coupled with a reduction in cash reserve ratio will ease the problem of cash flows. The 3-month moratorium on loans and deferment of interest payments on them will be a breather for borrowers. Banks are likely to transfer these benefits to customers.”

Considering that the impact of the pandemic on the economic outlook is negative and highly uncertain, taking strong steps to protect the domestic economy is of paramount importance.

“The RBI’s move to reduce the repo rate and the reverse repo rate by 75 basis points and 90 bps, respectively, is appreciable. Also, the announcement of a three-month moratorium on the payment of loan installments would certainly bring some relief to the borrowers during the most difficult times faced by the nation and the citizens. We hope that both the Finance Ministry as well as the RBI will push the banks to transfer these benefits to the end consumers as this will be one of the biggest steps in keeping the economic activity rolling in these challenging times,” said Ashish Arora, Director-Distribution, Viridian RED.

Developers say that amid the lockdown due to COVID-19, the economic activity in the country is under tremendous stress. The steps taken by the RBI will ensure that finance is kept flowing to keep the domestic economy protected.

“Injecting a substantial amount of Rs 2.8 lakh crore via various instruments is also a great step to ensure liquidity in the system. The decision to reduce the repo rate by 75 basis points to 4.4 per cent has proven to be a much-needed step considering the present situation of the country. While a reduction in CRR will ensure cash flow, a three-month moratorium on all loans will offer a breather to all borrowers. Overall this is a major step to improve liquidity conditions, cheer growth and safeguard financial stability,” said Ashish Sarin, CEO, AlphaCorp.

“The RBI measures to bolster the economy amidst the lockdown are indeed commendable. The slashing of the repo rate by 75 bps and a reduction in the cash reserve ratio will enable more liquidity into the system and overcome the problem of cash crunch. This will be crucial to the functioning of businesses in the wake of the Covid-19 pandemic. We expect the demand to pick up gradually across sectors, including real estate, followed by a revival in consumer sentiment,” said Ravish Kapoor, Managing Director, Elan Group.

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