Rate status quo no surprise; industry hails RBI steps on liquidity, loan rejig

The Monetary Policy Committee of the Reserve Bank of India (RBI), at its meeting on August 6, decided to keep the policy repo rate unchanged at 4.0 per cent. Consequently, the reverse repo rate under the LAF remains unchanged at 3.35 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 4.25 per cent.

The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.

RBI Governor Shaktikanta Das also announced stimulus measures, which included additional liquidity of Rs 10,000 crore at repo rate to NABARD and NHB. The central bank also allowed lenders to restructure corporate and MSME loans as well as raised the limit of loans that can be availed against gold ornaments and jewellery.

While the status quo on rates came as no surprise to the realty sector, most stakeholders in the industry welcomed the apex bank’s steps to tackle liquidity challenges. 

Realty & More reproduces the edited version of the industry feedback.  

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Nimish Gupta, MD, RICS South Asia: RICS commends the latest announcements by RBI in a series of effective measures, taken to safeguard the sector against the liquidity challenges caused by COVID -19. The additional special package of Rs 10,000 crore for NBFCs and National Housing Bank will go a long way in granting financial relief to the real estate sector which has been ailing for quite a while now. It will provide an impetus to the all-time low ebbing market sentiments, in dire need of support.

Anuj Puri, Chairman, ANAROCK Property Consultants: Much along the expected lines, the RBI kept repo rate untouched at 4 pc and reverse repo rate at 3.35 pc amid a recent rise in retail consumer prices. The RBI was expected to do all it can to keep the inflation rates reined in for the duration. However, the RBI announced several additional measures that will go on to accelerate the economy, enhance liquidity, improve flow of credit and deepen digital payment facilities, among others. Commendably, its allotment of INR 5,000 crore each to National Housing Bank and NABARD is a much-needed step for sectors including real estate reeling under the liquidity crisis.

Anshuman Magazine, Chairman & CEO – India, South East Asia, Middle East & Africa, CBRE: The RBI’s decision to provide additional liquidity to National Housing, even though it kept the repo rate unchanged at 4 per cent, is a positive step towards infusing liquidity and help NBFCs and housing sector tide over the liquidity crisis. The additional funding will ease the cash-flow burden, improving the overall sentiments and market performance.

Niranjan Hiranandan, President, Assocham and Naredco: A positive step by Reserve Bank of India to pay heed to India Inc’s long-pending demand of one-time restructuring of loans without classifying them as NPAs, by setting up an expert committee steered by KV Kamath. Opening up the window for restructuring of loans to companies, individuals and MSME under mandated safeguards grants breather to the liquidity strapped industry. A flexible repayment scheme under the new resolution framework shall bring in the much-needed relief to resume operations smoothly.

Surendra Hiranandani, CMD, House of Hiranandani: We expected more stringent measures from the RBI booster to revive the economy. A cut in the policy rate could have helped stimulate growth and demand particularly in the wake of COVID-19 crisis. The urgency to take direct measures for consumers to revive growth in the residential real estate was the need of the hour in the present scenario as it would have persuaded potential customers to firm up their decision to buy their dream home. With RBI maintaining status quo on policy rate front, it is also important to focus on improving the transmission of the past rate cuts as the repo rate is still at a historical low. An amount of Rs 10,000 crore of additional liquidity provided to NABARD and National Housing Bank is a welcome move as it will help the NBFCs and housing sector to tide over the liquidity crisis.

Rakesh Reddy, Director, Aparna Constructions & Estates: The latest measures announced by the RBI are a welcome move. They are aimed at improving liquidity, facilitating credit flow, and easing the burden of loan payments. The decision to allot an additional Rs. 10,000 crores to NABARD and National Housing Bank will ensure much-needed liquidity for NBFCs and the real estate sector. Keeping the repo rate unchanged is an accommodative policy stance. However, the transmission of the previous rate cuts must be implemented with immediate effect to successfully bolster the economy.

Rajan Bandelkar, President, Naredco West: ‘The RBI has approved a long-pending demand of the real estate sector to allow one-time restructuring of loans. This will boost the much-needed liquidity and streamline stressed assets in the real estate sector. But this restructuring comes with a stipulation and It will be implemented by March 31, 2021. It would have been an icing on the cake, had the RBI considered the net worth positive projects and allowed one-time restructuring for all the projects, which were held up.”

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Manoj Gaur, MD, Gaurs Group: Real estate sector needs hand- holding at this point in time. Though unchanged repo rate is understandable the need to have special measures in place cannot be denied. The buyers are coming back to the sector after realizing the importance of real estate assets backed by historically low EMIs, the developers too need some interventions that can help them expedite the process of development.

Amit Modi, Director, ABA Corp:  Market experts predicted a repo rate cut by 25 bps but unfortunately that was not declared. With the consumer confidence low due to the ongoing pandemic situation, and real estate sector going through a period of strife, we would expect the Government to look into initiatives on generating more demand in the real estate market as well as helping millions of first-time homebuyers to realise their dream.

Uddhav Poddar, MD, Bhumika Group: The main issue is that banks have not taken adequate steps to reduce the rates or to ease the liquidity. All the good steps taken by RBI earlier will not bear fruit if the banks don’t take necessary action at their level. Real Estate is badly affected due to the pandemic and we need support from the banks by providing adequate liquidity to the sector and providing cheap home loans to the customers, to make sure the segment can flourish again.

Ashish Bhutani, MD, Bhutani Infra: RBI Monetary Policy Committee has kept the repo rates unchanged, even when market experts cited the conditions being favorable for it. This decision was taken due to the signs of revival that the MPC has observed with unlock. However, the continuous surge in cases is constantly hampering the stability that commercial real estate needs for planning the expansion, mapping the already allocated funds, driving international investments, and dispersing some amount of capital to construction and permissions required.  We are hoping apex financial institutions assess the realty market closely to deliver, if not repo rate cuts, then some other kind of relaxation to improve sentiments of associated stakeholders.

Rajat Goel, JMD, MRG World: Repo rate cuts have been announced time and again by RBI during the last few months to combat the crisis. The recent announcements made are an indication that the industries and economy have a void to fill created by three months of lockdown. 

Raman Gupta, Director, Branding & Construction, GBP Group: The apex bank has kept the repo rate unchanged to 4 pc which was an expected move to keep the economy of the country afloat amidst the pandemic. Along with providing one-time loan restructuring to MSMEs we expect the apex bank to announce the same for the real estate sector as well.

Deepak Kapoor, Director, Gulshan Homz: The latest announcement by the RBI has been a dampener for the sector as we were hoping for some measures that could provide a much-needed boost. One of the expectations was one-time loan restructuring, which the sector has been demanding for quite some time now. Earlier, the Government has urged the RBI for non-classification of these loans as Special Mention Accounts (SMAs) and Non-Profit Assets (NPAs). Banks were hesitant to do this. However, a way out has to be formulated as without the support of one-time loan restructuring it would be difficult to meet the housing demand. Authorities may consider the projects that were stalled or delayed because of delays in approvals or even the projects where more than 60 per cent of work has been completed. The prevailing situation will only get complicated if timely steps are not taken to contain it.

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Kapil Kapur, Director, Sales,Strategy & Business Development Bullmen Realty India: Repo rate cut speculated by the experts was not a part of RBI announcement but loan restructuring became the major breakthrough amid the ongoing crisis when businesses are hit hard.  As the affect caused due to the lockdown was pervasive, consistent support from apex institutions like RBI had become a dire need for a stable market. Homebuyers are keen on coming back but their expectations and budgets have changed drastically. Developers were already struggling developing a plan of action that is accommodating to end-users and investors, but the recent alternative of loan restructuring would help them foster a long-term plan for their projects.

Nitesh Kumar, MD & CEO, Emami Realty: Real Estate is struggling with COVID-19 crisis and poor demand and we were hoping a further cut but due to food inflation and rise in fuel prices, the RBI has taken a pause. However, we welcome the regulatory and developmental proactiveness taken by RBI. It will go a long way in ensuring the financial stability of the country.  As per industry demand, RBI is setting up an expert committee to decide sector-specific financial parameters for loan restructuring. Putting additional liquidity to NABARD and National Housing Bank can give some relief in fighting with the liquidity crisis, and also improve the sentiments for the real estate industry.

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory: The RBI was expected to announce a status quo on rates after multiple and significant repo rate reductions over the past few months. The move to offer a further Rs.10,000 crores to NABARD & NHB will help bring liquidity to the sector. The 90 pc lending against gold will make it easier for the middle class to avail liquidity. It is important now for the RBI to further reduce the reverse repo to help banks lend further and let go of the cautious approach that has been adopted currently. Importantly, the move to form an expert committee to examine the one-time restructuring of loans will significantly help borrowers mitigate the impact of COVID-19 and the subsequent lockdowns.

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