Realty sectors on RBI’s decision to permit a one-time restructuring of loans

The Reserve Bank of India has decided to permit a one-time restructuring of loans, amid the ongoing Covid crisis which is hitting businesses hard. Announcing a review on monetary and credit policies on Thursday, RBI Governor Shaktikanta Das said a window under the June 7 stressed asset resolution framework will be provided which will enable lenders to implement a resolution plan, without a change in ownership.
 
Anuj Puri, Chairman – ANAROCK Property Consultants
 
Much along the expected lines, the RBI kept repo rate untouched at 4% and reverse repo rate at 3.35% 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. It will help infuse capital into the HFCs and eventually provide relief to developers battling liquidity issues in COVID-19 times.
 
Pradeep Aggarwal, Founder & Chairman – Signature Global Group & Chairman - ASSOCHAM National Council on Real Estate, Housing and Urban Development

"It was an expected move by the RBI to keep the repo rate unchanged and it is commendable that it is doing its part to ensure that the economy stays on the right path. However, the banks have not yet passed on the benefits to the consumers, which are not benefitting the real estate sector that in turn is affecting the allied industries too. RBI should take action so that banks should extend loans to the real estate sector. Liquidity crisis has to be tackled soon as the situation after Corona is dismal; this cannot happen until and unless banks take a firm decision to back the sector that has many allied industries attached to it".
 
Manoj Gaur, MD, Gaurs Group and Chairman, Affordable Housing Committee, CREDAI (National)

"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".
 
Mr. Amit Modi, President (Elect) CREDAI Western UP and Director ABA CORP
 
Market experts predicted a repo rate cut by 25bps in today’s announcement by RBI, 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 realize their dream.  At the same time, we would also hope that all the banks would pass on the benefits of previous repo rate deductions to end-users.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. We have to understand that real estate is an integral part of economic growth as it is the largest employment generator".

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.
 
Mr. 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 3 months of lockdown. Real estate being a sector with high-end products is vast and delivers a major impact on the overall growth of the nation. The benefits provided to this sector will have a far reaching impact on the economy as a whole. We are elated that the government has shown support towards us with schemes like CLSS & PMAY ,realty will now be able to fully utilize its potential with the  impetus provided.
 
Mr. Raman Gupta, Director- Branding & Construction- GBP Group

In today’s announcement the apex bank has kept the repo rate unchanged to 4% which was an expected move to keep the economy of the country afloat amidst the pandemic. Being one of the major contributors to the economy of the country, the benefits provided to the sector will have a positive impact on the overall growth of the nation. With the schemes like CLSS & PMAY along with the low repo rates the customers are moving back towards the real estate sector. 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.
 
Kapil Kapur, Director - Sales,Strategy & Business Development Bullmen Realty India
 
Repo rate cut speculated by the experts was not a part of today’s 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.  Home buyers 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.