SME Times is powered by   
Search News
Just in:   • Adani Group to invest Rs 57,575 crore in Odisha  • 'Dollar Distancing' finally happening? Time for India to pitch Rupee as credible alternative: SBI Ecowrap  • 49% Indian startups now from tier 2, 3 cities: Jitendra Singh  • 'India ranks 3rd in global startup ecosystem & number of unicorns'  • LinkedIn lays off entire global events marketing team: Report 
Last updated: 06 Feb, 2020  

Realty.9.Thmb.jpg Realty sector hails RBI's relief measures

Realty.9.jpg
   Top Stories
» 49% Indian startups now from tier 2, 3 cities: Jitendra Singh
» 'India ranks 3rd in global startup ecosystem & number of unicorns'
» Tripura exported over 9K tonnes of pineapples in 2 years
» CPI inflation eases to 6.71% in July, IIP falls to 12.3%
» Rupee depreciates 12 paise to close at 79.64 against US dollar
SME Times News Bureau | 06 Feb, 2020

The Reserve Bank of India's (RBI) monetary policy meet on Thursday offered major policy measures to support the slowing real estate sector, drawing applause from sector players.

To boost growth and lift sentiment, the RBI has eased the cash reserve ratio (CRR) requirement of commercial banks for sectors with multiplier-effect, including the residential housing segment. The other sectors which would benefit from the decision are automobiles, and micro, small and medium enterprises (MSME).

"It has now been decided that scheduled commercial banks will be allowed to deduct the equivalent of incremental credit disbursed by them as retail loans for automobiles, residential housing and loans to MSMEs, over and above the outstanding level of credit to these segments as at the end of the fortnight ended January 31, 2020, from their net demand and time liabilities (NDTL) for maintenance of cash reserve ratio (CRR)," said the RBI's Statement on Developmental and Regulatory Policies.

This exemption will be available for incremental credit extended up to the fortnight ending July 31, 2020.

The apex bank also extended the date of commencement of commercial operations of project loans for commercial real estate which have been delayed for "reasons beyond the control of promoters" by another one year without downgrading the asset classification in line with treatment accorded to other project loans for the non-infrastructure sector.

"This would complement the initiatives taken by the government of India in the real estate sector. The detailed instructions will be issued shortly," the RBI statement said.

The decisions brings a sense of relief for the cash-strapped housing sector. Real estate stocks rose post the announcements.

Market players and experts lauded the decisions. Commenting on the extension of restructuring of project loans by a year, Anuj Puri, Chairman Anarock Property Consultants said: "This is a big move and will bring the much-needed relief to the cash-starved real estate sector and to both developers and the HFCs from the liquidity perspective."

It will help ease out the time for maintaining and managing cash flows for cash-strapped developers and help them to complete several stuck projects, Puri said, adding, however, that it will not address the other main issue prevailing in the real estate sector - that of continuing low demand.

Ramesh Nair CEO and Country Head, JLL India said: "The RBI's move today to ease rules for projects delayed for reasons beyond the control of promoters by one year will provide the much-needed elbow room for developers."

With the lower provisioning requirement for retail loans extended to the housing segment, Shishir Baijal, Chairman and Managing Director of Knight Frank India said that there are hopes that the new measure would translate into lower cost of loans for home buyers as well.

"The encouragement also comes to the development side of the business where the long-standing industry demand for asset classification has been addressed. This will augment liquidity situation for developers too. With these two significant initiatives by the RBI, the real estate sector will hope to make a faster comeback," he added.

Anshuman Magazine, Chairman and CEO - India, South East Asia, Middle East and Africa at CBRE also praised the accomodative stance of the government.

"The RBI decided to keep the repo rate unchanged at 5.15 per cent and continue with its accommodative stance for as long as necessary to revive economic growth while ensuring that inflation remains within the target. The decision could be attributed to the green shoots of economic recovery in the form of improved index of industrial production and core sector performance," Magazine said.

According to Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani, the additional liquidity will help in boosting demand in the market in the core sectors of real estate and automobile.

"The move shall also help in completion of stalled projects in the sector and result in increased buyer confidence. However, we were hopeful of an announcement that would directly induce the home buyers to buy homes with a reduced rate of interest," Hiranandani said.

He, however, added that being an interest sensitive sector, the RBI's decision to not lower interest rates has come as a disappointment to the real estate industry.

 
Print the Page
Add to Favorite
 
Share this on :
 

Please comment on this story:
 
Subject :
Message:
(Maximum 1500 characters)  Characters left 1500
Your name:
 

 
  Customs Exchange Rates
Currency Import Export
US Dollar
66.20
64.50
UK Pound
87.50
84.65
Euro
78.25
75.65
Japanese Yen 58.85 56.85
As on 13 Aug, 2022
  Daily Poll
PM Modi's recent US visit to redefine India-US bilateral relations
 Yes
 No
 Can't say
  Commented Stories
» GIC Re's revenue from obligatory cession threatened(1)
 
 
About Us  |   Advertise with Us  
  Useful Links  |   Terms and Conditions  |   Disclaimer  |   Contact Us  
Follow Us : Facebook Twitter