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RBI has permitted a moratorium of three months on payment of instalments

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The moratorium on term loans and the deferring of interest payments on working capital will not result in asset classification downgrade. EMIs will resume after the moratorium period gets over.

Reserve Bank of India has permitted a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020. This means, no EMI would be deducted from the account of anyone who has a loan outstanding.

The moratorium on term loans and the deferring of interest payments on working capital will not result in asset classification downgrade. EMIs will resume after the moratorium period gets over.

“All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) (“lending institutions”) are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020,” said RBI.

“Stakeholders in the Indian economy will heave a sigh of relief, as these moves reflect measures to take on the economic crisis caused by the COVID-19 pandemic. As the RBI Governor pointed out, these moves will enhance liquidity and ensure smooth functioning of financial institutions, while the EMI moratorium will ensure no impact on credit ratings on loan repayments. The volume of measures carried out by the apex bank to infuse liquidity amounting to Rs 3.75 lakh crores back in the system is robust and applauded to uplift market sentiments. This fiscal relief package in addition to the FM’s Rs 1.7lakh crore relief package ensures that the government is vigilant to retrieve nation out of economic pain and safeguard job loss.”Niranjan Hiranandani – President- Assocham and NAREDCO

“It is pertinent to note that total outstanding loans of real estate developers from Commercial banks, NBFC s and HFCs is estimated to be around Rs 4.5 lakh crore as of March 2020. At the same time, this moratorium will definitely benefit homebuyers as these financial institutions have lent an estimated Rs 20 lakh core as of March 2020,” said Ramesh Nair is the CEO & country head of JLL India.

“The RBI’s much – needed liquidity infusion of Rs 3.74 Lakh crore into the economy comes as a big relief for the country, its markets and the people who are battling a COVID – 19 war in already prevailing recessionary conditions. The repo, reverse repo rate and CRR cuts would extend more lending powers to the banks. A moratorium of three months on repayment of loans and interest thereon, with a further assurance of not classifying such assets for downgrading, will give relief to the homebuyers and businesses. It will ease them from financial burdens and help them plan financial priorities better in this challenging time.”Mr Rajan Bendelkar, President, Western Region, Naredco and Director of Raunak Group

“The 75 bps repo rate cut and reverse repo being brought down to 4% by the Reserve Bank of India provides the much needed relief for the economy. This cut in reverse repo should incentivise the banks to lend more. Additionally, `3.74 lk cr liquidity will be injected into the system via different measures by the RBI and this will help arrest the financial stress across sectors.”Mr Ram Raheja, Director and Head-Director & Design at S Raheja Realty

“The sharp repo rate cut of 75 bps by RBI is a step in the right direction. Sharper cut in reverse repo rate by 90 bps will compel banks to lend instead of parking surplus liquidity with the RBI. The cut in CRR by 100 bps and the TLTRO will infuse liquidity in the systems, which seems to be the crying need of the hour. The moratorium of 3 months for all term loans and deferment of interest on working capital by 3 months will be very helpful at this point when most businesses are unable to have a steady cash flow. We are hopeful that these measures will be complemented by further fiscal stimulus measures by the Central and State Governments to support demand in the economy. ”.Mr. Shishir Baijal, Chairman & Managing Director, Knight Frank India

“We welcome these measures as without them the economy will go into deflation. I hope that the quantum of relief and duration will be reassessed every fortnight in these difficult times and a total of 10% of GDP liquidity injection may need to be done to tide us over these unprecedented times”Mr. Rohit Poddar, Managing Director, Poddar Housing and Development Ltd. and Joint Secretary, NAREDCO Maharashtra 

“This is a welcome move as the sizable reduction of the Repo Rate by 75 bps from 5.15% to 4.4% is an all-time low, and is indicative of the intent of the central bank and the government. The reverse repo rate reduction by 90 bps to 4% will hopefully nudge banks to lend more to the unproductive sectors of the economy. To add to this, fiscal measures such as the deferring working capital interest, reduction of CRR for all banks by 100 basis points, amongst other measures, should address liquidity challenges faced by NBFCs and banks. ”Mr. Anshuman Magazine, Chairman & CEO – India, South East Asia, Middle East & Africa.

“We welcome these commendable steps by the RBI for reducing the Repo rate by 75 BPS and Reverse repo rate by 90 basis points to 4%.  This is likely to reduce EMI’s for borrowers and make new home loans cheaper. The RBI has also permitted financial institutions to allow a three-month moratorium on monthly instalments on all term loans. The rate cut is further expected to complement other monetary measures such as the deferring of working capital interest, reduction of CRR for all banks by 100 basis points should address liquidity challenges faced by NBFCs and banks by easing investment inflows into the country.”Mr J C Sharma, VC & MD, SOBHA Limited.

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