RBI Announces Measures To Ease Liquidity Crunch In Realty Sector
In a major move to boost liquidity in the market, the RBI, on April 17, announced several additional measures to accelerate the economy and facilitate bank credit flows in Lockdown 2.0. Among the various measures announced, commendably its allotment of INR 10,000 crore to National Housing Bank is a big move for the real estate sector reeling under the liquidity crisis. "It will help provide capital to HFCs and eventually provide major relief to developers battling liquidity issues in COVID-19 times," says Anuj Puri, Chairman – ANAROCK Property Consultants.
Further, RBI has reduced the reverse repo rates by 25 bps – it now stands at 3.75%. This is another big step as the rate cut will definitely send out positive signals in the current times, and will enable banks to lend even more.
Also, in another major relief to developers, the RBI has further extended the date of commencement of commercial operations (DCCO) of project loans for commercial real estate projects which are delayed for reasons beyond the control of promoters. This is indeed a big move and will bring much-needed relief to cash-starved developers. It will help in easing out time for maintaining and managing cash flows for these developers.
Piyush Gupta, Managing Director, Capital Markets at Colliers International India says, “There have been specific mention of lending to Real Estate Sector by NBFCs which reflects increased focus of the regulator on this sector." As per the announcement, developers now have additional one year to repay lenders which is over and above one year available so this will help management of cash flows and reduce asset classification stress of Real Estate focused NBFCs, Gupta adds. "Further, a window of Rs. 50,000 cr. under TLTRO will provide incremental liquidity to NBFCs, MFIs which could be utilised for onward lending to the real estate sector,” he says.
