Gurugram Real Estate Developers Laud RBI Measures
Gurugram realty developers have lauded RBI measures to inject liquidity into the Indian economy. The Reserve Bank of India today slashed the repo rate by 75 bps to 4.4 percent and reduced the reverse repo rate by 90 bps to 4 percent. Moreover, it has allowed a moratorium on all loans and deferment in interest payment on these loans for three months. Developers have, however, argued that much will hinge on whether the banks pass on these benefits to customers
"We welcome RBI's measure as it is an important step in the right direction. The need of the hour was to take care of the economic pandemic also in addition to taking care of the health pandemic. The comprehensive measures announced by RBI along with the fiscal measures by the government will impart financial stability as well as strengthen the sentiment across sectors including real estate in the wake of the Covid-19 pandemic. A substantial cut in repo rate to 4.40% as compared to 5.15% earlier coupled with a reduction in cash reserve ratio to 3% will ease the problem of cash flows. The 3-month moratorium on loans and deferment of interest payments on them will be a breather for borrowers. The banks are likely to transfer these benefits to customers. Moreover, the classification of "special mention accounts" in case of payment defaults will ensure that businesses sustain the momentum amidst the lockdown," said Pankaj Bansal, Director of M3M Group.
Developers stressed that these measures were the need of the hour considering the potent impact of the pandemic on the Indian economy.
Mr. Ashish Arora, Director-Distribution, Viridian RED said, "Considering that the impact of the pandemic on the economic outlook is negative and highly uncertain, taking strong steps to protect the domestic economy is of paramount importance. The RBI's move to reduce the repo rate and reverse repo rate by 75 basis points and 90 bps respectively is appreciable. Also, the announcement of a three-month moratorium on the payment of loan installments would certainly bring some relief to the borrowers during the most difficult times faced by the nation and citizens. We hope that both the Finance Ministry, as well as the RBI, push the banks to transfer these benefits to the end consumers as this will be one of the big steps in keeping economic activity rolling in these challenging times."
Elan Group which has Elan Miracle and Elan Towncentre as its marquee offerings echoed a similar view.
"The RBI measures to bolster the economy amidst the lockdown are indeed commendable. The slashing of repo rate by 75bps to 4.4 percent and a reduction in the cash reserve ratio will enable more liquidity into the system and overcome the problem of the cash crunch. This will be crucial to the functioning of businesses in the wake of the Covid-19 pandemic. We expect the demand to pick up gradually across sectors including the real estate followed by a revival in consumer sentiment," Ravish Kapoor, Managing Director, Elan Group said.
According to the developers, the 3- month moratorium on all loans will ensure the running of businesses even during the Covid-19 pandemic.
"We appreciate RBI measures to mitigate the effect of the Covid-19 pandemic. The reduction in repo rate to 4.4%, deferment in payment of interests on loans and 3-month moratorium on all loans will be crucial in reducing the debt burden of borrowers. To a great extent, these measures will minimize the hardships of the economy that is reeling under stress due to Covid- 19. We foresee the real estate sector as well to benefit from these measures including relief to debtors and a boost in consumer and investor sentiment in the sector," said Sandeep Agarwal, Chief Financial Officer, Pioneer Urban Land and Infrastructure Ltd.
The RBI measures were announced a day after Union Finance Minister Nirmala Sitharaman bailed out an economic package worth Rs 1,70,000 crore to cover the marginalized section of the society. The package includes a mix of food security and direct cash transfer benefits, which will shield daily wagers and small businesses during the lockdown in the wake of the Covid-19 pandemic.
The ongoing Covid-19 pandemic has affected over 700 people in India forcing the government to declare a nationwide lockdown for 21 days starting from 24th March 2020 onwards.