In a bid to boost liquidity and expand bank credit amidst economic crisis triggered by COVID-19 pandemic and the nationwide lockdown, the Reserve Bank of India (RBI) on Friday encouraged banks to lend more by slashing reverse repo rate by 25 basis points. This is the central bank’s second set of measure since the lockdown began from March 25.
Here is how the domestic real estate and allied sector reacted:
Pradeep Aggarwal, founder & chairman, signature global; and chairman, National Council on Affordable Housing, ASSOCHAM: 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.
Dhruv Agarwala, Group CEO, Housing.com, Makaan.com, and PropTiger.com: 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.
Prateek Mittal, executive director, Sushma Group: The reduction in reverse repo rate by 25 basis points and infusion of Rs 50,000 crore in NBFCs as announced by apex bank is indeed a welcome move. Also, the restructuring for up to 1 additional year of loans has been allowed to the real estate projects which will definitely contribute towards easing the liquidity crunch as well. We await further steps to be announced by the RBI as mentioned by the Governor.
Raman Gupta, director-branding and construction, GBP Group: With Covid badly impacting the cash flow of all the sectors of the economy including real estate, most of the sectors will rely heavily on the financial sector for survival. In such a scenario maintaining liquidity in the system becomes the key and today’s RBI announcements are a step in the same direction. Hopefully, banks will also participate in the endeavour.
Ankit Kansal, MD &CEO, 360 Realtors: After the extension of the nationwide lockdown, some slowdown in the economy was inevitable. The real estate sector 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, and offer financial incentives.
As the government has pledged to refinance the NBFCs, rollout stimulus packages for NHB, NABARD, SIDBI, etc, this will boost the liquidity in the market and 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. Interestingly, the inflation rates have declined and are expected to remain within 4% in the 1st half of 2020. This will offer ample policy manoeuvring bandwidth to the central bank and take more steps towards liquidity injection. The reduction in reverse repo rate by 25 basis points will help Banks to disseminate additional liquidity into the economy.
Uddhav Poddar, MD, Bhumika Group: RBI has taken these measures as they realised that despite lowering of rates the banks were only lending to large corporates and not to mid-sized and small businesses or real estate. Hence, RBI has provided liquidity to NBFCs which mainly service the mid and small businesses and to the real estate sector. The 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.