Impact of Reverse Repo Rate cut by RBI on Indian Real Estate Market

“Amidst this economic slowdown, revision of reverse repo rate that provides grants to varied economic sectors to maintain the liquidity is indeed a welcome move by RBI and Government. This will enable the banks to lend more. In addition to this, RBI has also announced a liquidity worth ₹50,000 crore under the Targeted Long Term Repo Operation (TLTRO) 2.0, which includes a special grant of Rs 10,000 crore refinancing package to the National Housing Banks (NHBs). This will aid in providing the much-needed liquidity to HFC’s. It will help in managing cash flows for the developers.  We hope this will ease up both the housing and commercial real estate market and boost the economy of the country better.

Furthermore, the RBI has also sanctioned NBFC loans to delayed commercial real estate projects to be extended by a year without restructuring. This is highly appreciated considering the present market scenario.” - Mr. Bijay Agarwal, MD, Salarpuria Sattva Group.

"The RBI announced several measures and guidelines that are essential for the phase-wise recommencement, post the lockdown.  The key focus remains on ensuring adequate flow of capital in the market and the 25bps cut in the reverse repo rate is a step towards the same direction. 

Relief to the NBFCs will undoubtedly help the real estate sector, also the infusion of Rs. 50,000 Crore to NABARD, SIDBI (Small Industries Development Bank of India) and the National Housing Board will further ease the way ahead.  Also it is a refreshing move that the loans given by NBFCs will not get categorised as NPAs even on non-repayment for a period of 1 year.

But it is also essential that these measures should be implemented in a time bound manner to improve the overall operations (of the industry) and boost customer sentiments. Realty industry will have to revolutionize the way it operates to gain momentum, as it still remains the second largest employer and is an essential cog in India INC.

Of course we hope, that all banks will incorporate these new rules, and we eagerly await the detailed guidelines on the same. The sector together with the various industry bodies have to devise a long-term systematic plan to ensure safe and prosperous work cultures.

The spirit of the RBI with these news sops is in the right direction to help a capital intensive sector like construction, but the entire economic machinery needs to work in tandem to ensure the nation recuperates fast.” - Mr Ashish R. Puravankara, M.D., Puravankara Limited.