The Reserve Bank of India announced a few positive measures for the real estate sector, that has been reeling under a COVID-induced liquidity crunch. These decisions were announced in the 24th Bi-monthly meeting of the RBI held today.
The repo rate, however, was decided to be kept unchanged at 4%, which is already at its lowest since 2000. The reverse-repo rate was maintained at 3.35%.
One-time restructuring of Loans
What bought a sense of relief to the real estate sector was the call to allow lenders to provide a one-time restructuring of loans without classifying them as NPAs. This would be applicable to companies, individuals and MSMEs and an expert committee helmed by K V Kamath would be constituted for the same.
Commenting upon this, Amit Modi, President (Elect) CREDAI Western UP and Director ABA CORP, says, “Market experts predicted a repo rate cut by 25bps in today’s announcement by RBI, but fortunately the longing demand from the real estate sector of loan restructuring was declared. With consumer confidence low due to the ongoing pandemic situation, and real estate sector going through a period of strife, we appreciate the government’s efforts and keen eye to look into initiatives that will help us in generating more demand in the market as well as in helping millions of first time homebuyers to realize their dream. Loan restructuring will strengthen the real estate outlook for developers in the coming years and pave way for a consistent growth.”
Rs 5,000 Crore fund for the National Housing Bank (NHB)
Another key announcement that has given a ray of hope to many stakeholders in the sector struggling for last mile financing is the decision to infuse Rs 5000 Crore into NHB. Talking about the ground level execution of these decisions, Pradeep Aggarwal, Founder & Chairman – Signature Global Group, adds, “It was an expected move by the RBI to keep the repo rate unchanged and it is commendable that it is doing its part to ensure that the economy stays on the right path. However, the banks have not yet passed on the benefits to the consumers. Banks need to extend the benefits to the real estate sector which would aid several allied industries attached to it too.”
The first half of 2020 saw the real estate sector grapple with negligible sales and limited new launches. With the continues measures being announced by the government, the sector is expected to gradually pick up pace towards the beginning of 2021.