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COVID-19: RBI’s additional liquidity measures will provide relief to real estate

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The central bank’s decision to reduce reverse repo rate by 25 basis point and additional liquidity for the National Housing Bank (NHB) will also accelerate and facilitate bank credit flows towards to the beleaguered sector in the wake of Covid19 crisis. 

The Reserve Bank of India (RBI) announced a host of measures, including injecting Rs 50,000 crore via targeted long-term repo operations, so that banks provide more  liquidity, specifically to small and mid-sized non-banking finance companies (NBFCs) and micro-finance institutions.

The central bank’s decision to reduce reverse repo rate by 25 basis point and additional liquidity for the National Housing Bank (NHB) will also accelerate and facilitate bank credit flows towards to the beleaguered sector in the wake of Covid19 crisis. 

“The RBI had earlier permitted extension by one year without asset classification downgrade, if DCCO was delayed for reasons beyond control of promoters. This relief is now also allowed for NBFCs; loans by NBFCs to commercial real estate will get the same relief. This move will positively impact NBFCs and real estate,” Dr. Niranjan Hiranandani, President – Assocham and NAREDCO

“The move on reduction of reverse repo rate by 25 basis points shall push banks to open up the credit flow to economic activities. Similarly, allowing a 90 day extension for asset classification to loans that have been granted moratorium window is a critical step to assuage credit quality concern of lenders.”Mr. Shishir Baijal, Chairman & Managing Director, Knight Frank India 

“Among the various measures announced, commendably its allotment of INR 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. Further, RBI has reduced the reverse repo rates by 25 bps – it now stands at 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 even more.”Anuj Puri, Chairman – ANAROCK Property Consultants

“The RBI’s decision to reduce the reverse repo rate further by 25 bps and reduction in LCR, will help bring liquidity in the market place with banks lending further. The refinance facilities of Rs.50,000 crores for NABARD & NHB, and mandatory 50% investment of TLTRO-2 to small, mid-sized NBFC’s will bring much needed capital for HFC’s & NBFCs, a move that was much required.” Mr. Kaushal Agarwal, Chairman,Director, The Guardians Real Estate Advisory  

“The announcement in the reverse repo rate cut from 4 per cent to 3.75 percent should further push banks to lend to the productive sectors of the economy. Announcement of refinancing facility for leading financial institutions such as NABARD and SIDBI, relaxation of stressed asset classification and resolution norms and provision of another window of Targeted Long Term Repo Operations worth INR 50,000 cr will provide additional fiscal stimulus to the economy.”Mr. Anshuman Magazine, Chairman & CEO – India, South East Asia, Middle East & Africa, CBRE.

“Today’s announcement will give an initial fillip to the real estate sector. The Central Bank’s focus to provide credit flow to NBFCs is a key step. This will provide a boost to various real estate activities. As per the latest data by RBI, NBFCs outstanding credit to the commercial real estate stood at INR 1,29,359 crore as of end September 2019. The relaxation of NPA classification norms and extension of one year for commencement of projects to real estate developers by NBFCs will provide the much needed relief to the sector.”Ramesh Nair, CEO and Country Head, JLL India

“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.”Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com

“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.”Pradeep Aggarwal, Founder & Chairman, Signature Global and Chairman, National Council on Affordable Housing, ASSOCHAM

“The second announcement by the RBI during the lockdown period is an indication that the government is working tirelessly to find out ways to address the situation. Real estate was demanding the steps that could help the sector and now it is again up to the banks to take a leaf out of RBI announcement where it has talked about the real estate sector and extend a helping hand to real estate.”Manoj Gaur, MD, Gaurs Group and Chairman, Affordable Housing Committee, CREDAI (National)

“The liquidity provisions made by RBI through Rs 50,000 TLTRO deployment will enable HFCs and NBFcs to raise financing through bonds, commercial papers etc.  Special Refinancing facility of Rs 10000 crore announced for National HousingBank will ease some of the liquidity challenges for housing financing companies to get bank financing in the wake of COVID 19 crisis.”Mr. Ravindra Sudhalkar, CEO at Reliance Home Finance

“The current reduction in the reverse repo rate by 25 basis points to 3.75 percent from the earlier 4 percent will increase the much-needed liquidity in the market. With relaxation offered to NBFCs to extend the realty loans by a year, the real estate sector will have greater support in these difficult times. With inflation being at the lower side and greater transmission by banks and NBFCs, the real estate sector is likely to revive in the medium term from the impact of the current crisis.” Mr. Ankush Kaul, President (Sales & Marketing), Ambience Group

ALSO READ: RBI cuts reverse repo rate by 25 bps to 3.75%


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