Amid rising inflationary pressure and a grim economic outlook, the Reserve Bank of India’s Monetary Policy Committee (MPC) kept the repo rate and reverse repo rate unchanged at 4% and 3.35% respectively. In a televised address, RBI Governor Shaktikanta Das said “the global economy is heading into recession, and inflation outlook is “highly uncertain”.
On the positive side, a sum of Rs 10,000 Crore was announced as additional liquidity for NABARD and National Housing Bank.
RoofandFloor spoke to the industry stalwarts to get their perspective on this latest development. Here’s a snapshot:
“An accommodative stance”
Rohit Poddar, MD, Poddar Housing and Development Ltd and Joint Secretary, NAREDCO Maharashtra
RBI focusing on augmenting liquidity with an accommodative stance with no rate cut is a smart move in terms of channelising the demand-based macros in the economy. As liquidity in the system is important to allow the financial institutions to transmit RBI’s rate cut benefits with reduced loan interest rates to the borrower, Additional Specialty Liquidity Facility (ASLF) is thereby, seen as a welcome move.
ASLF of Rs 5000 crore to the National Housing Bank will provide much required cushioning for the housing finance companies to lower the home interest rates. This will translate into an upsurge in demand with a lower cost of credit to the homebuyer and materialise in a likely upsurge in residential inventory offtake, especially in the near onset of festivity in the country.
“A positive step”
Niranjan Hiranandani, President, 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.
Opening up the window for the 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.
The enhanced finance flow should see developers in need of last-mile funding being able to complete their stalled projects.
“Will help bring liquidity to the sector”
Kaushal Agarwal – Chairman, The Guardians Real Estate Advisory
The move to offer a further Rs 10,000 crores to NABARD & NHB will help bring liquidity to the sector. The 90% lending against gold will make it easier for the middle class to avail liquidity. It is crucial now for the RBI to further reduce the reverse repo to help banks also lend 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.
“Will ensure financial stability in the country”
Nitesh Kumar, MD & CEO, Emami Realty
Real Estate is struggling with COVID-19 crisis and weak demand we were hoping a further cut, but due to food inflation and rise in fuel prices, RBI has taken a pause. But we are welcoming 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 into sector-specific financial parameters for loan restructuring.
“More needs to be done”
Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Limited
We hope the government addresses some of the much-needed requirements of the real estate sector like the single-window clearance mechanism and granting of industry status as these would help the sector’s growth immensely.
Additionally, revolutionary measures such as the prospective 100% FDI policy for investment in completed projects would prove to be highly beneficial in overcoming the liquidity crisis caused by the pandemic. We look forward to the government’s continued support and are confident that by working together, the public and private sector can truly thrive in the post-pandemic world.