The Reserve Bank of India’s move to allow a moratorium of 3 months on loan repayments and reduction in repo rate by 75 basis points is expected to help both home buyers and realty developers manage their liquidity crunch in the backdrop of the outbreak of Coronavirus.
Realty developers and industry experts lauded key measures announced by the central bank to support the economy. However, they also stated that banks need to transmit the same soon to help to boost liquidity and potential reduction in installments.
‘‘Reduction in repo rate, additional liquidity of about Rs. 3.74 lakh crore induced reduction in CRR, Long Term Repo Operations and enhancement of Marginal Standing Facility and the moratorium of three months on payment of installments in respect of all term loans outstanding as on March 1, 2020, are all timely and well-intentioned measures by RBI to address the financial stress owing to COVID-19,” said Satish Magar, President, CREDAI National.
He expects quick implementation of these measures by the banks and non-banking finance companies. The move is also expected to help realty developers avoid default in payments and any subsequent downgrades.
“The moratorium will assuage fears of the downgrade of credit ratings and need to recognize non-performing assets (NPA) due to a potential non-payment of installments which was clearly a challenge foreseen in the sector with lockdown,” said Gaurav Karnik, National Leader – Real Estate, EY India.
Niranjan Hiranandani, President of NAREDCO, is of view that this fiscal relief package in addition to the Finance Minister’s Rs 1.7lakh crore relief package ensures that the government is vigilant to retrieve nation out of economic pain and safeguard job loss.
On Thursday, Finance Minister Nirmala Sitharaman announced a number of measures to tackle the economic distress caused due to the Coronavirus outbreak and the subsequent lockdown announced to deal with the situation.
While announcing the Rs 1.7-lakh-crore relief package for poor, the minister directed state governments to use the Building and Other Construction Workers' Welfare (BOCW) Cess Fund that has around Rs 31,000 crore to help those who are facing economic disruption because of the lockdown.
News Source: Economic Times, Url: https://bit.ly/3aunuX9