Industry reactions to RBI Governor Shaktikanta Das’s announcement today

Reserve Bank of India (RBI) Governor Shaktikanta Das today (May 22, 2020) announced that the repo rate is being slashed by 40 basis points to 4 per cent. He said the reverse repo rate will witness a similar cut to 3.35 per cent. The RBI has also extended the moratorium on loans by financial institutions by three more months till August 31. Here are some of the reactions:

Abhimanyu Sofat, Head of Research, IIFL Securities 
“The commentary of the governor speech underpins the low prospects of a V shaped recovery. RBI commentary indicate the stress in the economy on both demand and supply is likely continue. We also believe government should provide subvention on existing loans or bear some cost of the haircut of existing loans. This would ensure more confidence to banks to lend to lower rated entities or individuals.”

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory
“Repo rate at 4% is going to drastically reduce the borrowing cost and contribute to demand generation. The banks should immediately pass on the reduction in the repo to ensure the objectives of demand creation and liquidity infusion are achieved. The extension of moratorium on loans by another 3 months will help institutions and individuals alike in battling the ongoing crisis. The much required liquidity in the market place is also going to get a boost from the measures announced by RBI today. We would also urge the government to focus on reducing the high transaction cost, the same will go a long way in revival of the real estate sector post the lockdown.”

Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com
“With a view to supporting the economy in general and real estate in particular in the wake of Covid-19, the government has in the recent past made a series of announcements. The RBI decision to further reduce the repo rate to 4% is a major step in that direction. The move will not only help developers but also homebuyers who have been under extreme pressure due to the prolonged lockdown which has impacted their income. This along with the move of extending loan moratorium for another three months will be extremely helpful in lowering the burden for those who are paying EMIs or using credit cards and lower financial stress. What needs to be seen is how quickly the banks reflect this change in their respective rates.”

Amit Modi, President-Elect CREDAI Western UP and Director ABA Corp
“RBI’s recent announcements will further provide more relief to several Indians who have been forced to sit home in the wake of the novel coronavirus outbreak, but first, all the banks need to make sure that there is a quick transmission of the announced rate cuts to the end consumer, else the whole effort will be futile. We also wholeheartedly welcome the extension of 3 month moratorium on EMIs till 31 August and this should be applicable right away to bring relief to millions of homebuyers across the nation. We feel that RBI and the Government should proactively make sure that these benefits reach the end consumer, especially now that there is a 40 basis point cut and in the cash reserve ratio to ensure sufficient liquidity in the system.”
Pradeep Aggarwal, Founder & Chairman, Signature Global and Chairman, ASSOCHAM – National Council on Real estate, Housing & Urban Development
“Now the situation for homebuyers might improve further as home loan interest rates are expected to come down further. People, who have decided to buy a home during the lockdown period will take a quick decision if banks pass on the benefit. Steps by the RBI are aimed at easing the economy. Affordable housing will benefit the most as the buyers of this segment are very particular about the EMIs. With historically low EMIs, people will go out to buy and thus increase the demand. Now government has to come out with steps to help the developers working in this segment so that projects can be completed without any hindrance.”
Uddhav Poddar, MD, Bhumika Group
“We welcome the further reduction of policy rates by 40 basis points announced today, with this round of reduction the lending rates are like to be at the lowest in 10-15 years. The extension of loan moratorium by another 3-months will help a vast majority of people tide through this period. However, we were expecting RBI to allow a one time restructuring of loans seeing the pain across sectors, and we hope to hear some announcements in that regard soon.”
Deepak Kapoor, Director, Gulshan
“We welcome the repo rate cut to 4% from 4.4% earlier by RBI, along with the extension in EMI moratorium for another 3 months. This will further aid in the revival of several industries, only if the benefits are passed on promptly and effectively to the borrowers with reduced loan interest rates. The sector of real estate has always been largely influenced by changes in loan and interest structures, we are hoping this decision will further prove resourceful to end-users.”
Yash Miglani MD Migsun Group
“We are happy to see that the government and apex bank are making efforts like never before to overcome the damage done to the economy due to Covid-19. Reduced repo rates are likely to benefit borrowers and developers. The extension on loan moratorium will support the people in these trying times. But as real estate is passing through a challenging phase, one time loan restructuring that has been a long standing demand is warranted at the earliest.”
Vikas Bhasin, CMD, Saya Homes
“RBI on its part is showing seriousness towards the health of economy. Now we hope that banks should pass on the benefit to the buyers in quick time. The demand for homes will increase further as home loan interest rates will come down to a historic low. It is good news for the real estate sector.”
Dhiraj Jain, Director, Mahagun Group
“After the latest announcement by the RBI we expect the demand to go up. The fence sitters will have no better time to buy than the current period. People have already assessed the importance of owning a home, which was clear from the bookings during the lockdown period. The government must now step forward and give relief package to the sector so that things move smoothly.”
Harvinder Singh Sikka, MD, Sikka Group
“This time it is likely that banks will transmit the benefits to customers quickly as RBI is likely to keep a watch on it. In the current scenario it was important to take steps that can make the economy start recovering. The latest announcements indicate that RBI is likely to ease its monetary policy to financial system. Banks also should take a leaf out of this and extend loans to real estate sector, which in turn will play a role in the economy growth.”
Prateek Mittal, Executive Director, Sushma Group
“We welcome this announcement by the RBI governor to reduce the repo rate by 40 bps from 4.4 % to 4 %. Holding such a prominent position in building the country’s economy, the realty sector will garner extensive benefits and the reduced repo rate will hugely support the buyer and boost the demand. Along with that the extended term loan moratorium period will provide the relief towards liquidity for developers to focus on faster execution of projects.”
Ankit Kansal, MD & CEO, 360 Realtors
“The RBI measures to reduce the repo rate & reverse repo rate is in continuation of the govt. policies to build liquidity & enhance its circulation in the system. The Real Estate welcomes a prudent step. It will help in managing supply-side bottlenecks by providing better and easier credits to the developers. Likewise it will boost demand in the form of cheaper home loans. The timing is also apt as everywhere we can see the partial suspension of the lockdown and things are gradually coming back to normal. In such circumstances, a positive step like this can give further confidence & foster faster revival.”
Aashit Shah, Partner at J Sagar Associates
“The new relief measures are a step in the right direction. The additional 3 month moratorium on debt repayments will provide much needed relief to borrowers.   Extension of timelines for export credit and receipt of import payments were much needed given the problems in cross border transactions. Further, excluding the 6 month period ending August 2020 from the 210 day implementation under the RBi framework will provide some breather to banks from additional provisioning. However, given the announced suspension of new IBC proceedings for upto a year, this relief may not be sufficient for debt restructurings that were in their last stages in February 2020. Additional changes are required in the RBI framework to deal with various issues such as priority for rescue financing, mandatory adherence to the intercreditor agreement, reducing provisioning for assets, and expanding the pool of creditors involved”. 

Anuj Khetan, Director, Vijay Khetan Group

"RBI has played its part but banks need to do theirs by transmitting the rate cuts to the consumers. The extension of the moratorium on loans by further 3 months would bring in some relief to the borrowers in this difficult situation. These measures will have a cascading effect on the economy by offsetting some pains of the salary cuts faced by employees as the biggest expense are the EMIs for everyone. RBI and the Finance Minister will need to work in tandem to bring in long-term economic measures to push businesses atleast in the first gear from neutral rather than giving piece meal solutions which are like temporary band-aids which will hurt even more when it will be ripped; pushing the economy in reverse.

In the current scenario, liquidity is accessible in abundance to the companies that share an existing relationship with the financial institutions. Banks are turning away new proposals from those companies who were debt free and have not leveraged any services from them in the pre-Covid era but would like to avail some credit now for the expansion of their business." 

Padmaja Chunduru, MD & CEO of Indian Bank 
“Moratorium extension is the need of the hour.We are extending moratorium to all borrowers across all segments. This will now continue upto august 2020 in accordance with RBI dispensation
Conversion of interest on working capital loans for the moratorium period into FITL will give a breather to the borrowers. The time period for repayment of that component could have been longer than just 7 months. Increase in Group exposure limits will help big companies tide over hurdles in raising funds from market”.
Mohinder Aggarwal, State Secretary, Punjab Pradesh Beopar Mandal
“The announcements made today by RBI Governor are welcome. Moratorium extension will surely give relief to people as it was the need of the hour. The repo and reverse repo rate cut of 40 basis points by RBI, is also a welcome announcement. However, it has been observed that some banks branches do not implement these announcements practically. We strongly feel that RBI must take appropriate action against the bank officials who failed to implement all the announcements in toto.”