NBFC Loans To Delayed Commercial Projects Can Now Be Extended By One Year
New Delhi: Bringing much relief to the NBFCs and to the real estate sector as a whole, the Reserve Bnak of India today allowed extending the date for commencement for commercial operations (DCCO) by as much as a year, in case of loans provided to commercial realty projects that are delayed due to reasons beyond the control of promoters of those projects.
This extension would not be considered as restricting, thus giving a lot of leeway to the NBFCs and real estate developers.
"The date for commencement for commercial operations (DCCO) in respect of loans to commercial real estate projects delayed for reasons beyond the control of promoters can be extended by an additional one year, over and above the one-year extension permitted in normal course, without treating the same as restructuring. It has now been decided to extend a similar treatment to loans given by NBFCs to commercial real estate," said RBI Governor Shaktikanta Das today while addressing the nation.
The RBI has come out with a slew of measures to infuse liquidity into the system and there are many reasons for the real estate sector to rejoice.
THE RBI cut the Reverse Repo Rate by 25 basis points to 3.75 percent. However, it kept the Repo Rate unchanged.
The RBI also said Rs 50,000 crore will be provided to National Housing Bank, part from NABARD and SIDBI to meet their sectoral financing needs.
RBI has also decided to have additional TLTRO operations of Rs 50,000 crore to begin with.
Coinciding with these announcements the Home ministry also allowed housing finance companies (HFCs), NBFC, and micro finance institutions to work during the lockdown. However, these companies will have to work with bare minimum staff.
The real estate chieftains have welcomed all the decisions and said these measures are surely welcome at a time when the industry has been severely affected due to the corona pandemic and lockdown.
“We are extremely delighted and find a great sense of reassurance with the central bank taking cognizance of specific problems faced by real estate sector and proactively taking targeted measures to address those issues. The measures taken for liquidity support to NBFCs, HFCs and MFIs will meaningfully help the cause of the real estate sector,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.
“The Government had announced several measures in March this year to ease the financial stress. These steps have been further supplemented by the RBI’s announcements to slash the reverse repo rate by 25 bps and the Targeted Long-Term Repo Operations (TLTRO) 2.0 worth Rs 50,000 crore. RBI’s move allowing NBFCs to extend realty loan by 1 year, if projects are delayed due to unavoidable circumstances, will also provide the much-needed support to the sector,” said J C Sharma, VC & MD, SOBHA Limited.
“RBI’s move allowing NBFCs to extend realty loan by 1 year, if projects are delayed due to unavoidable circumstances, will also provide the much-needed support to the sector. Additionally, the allowance of similar benefits for loans given by NBFCs to real estate companies as given by scheduled commercial bank is a great step that will boost the sector growth. At times like this, agility is key in improving the economic situation of any nation,” said Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Ltd.
“In the wake of the evolving Covid-19 situation; the announcement in the reverse repo rate cut from 4 per cent to 3.75 percent should further push banks to lend to the productive sectors of the economy. In addition to this, RBI has also announced that loans given by NBFCs to real estate companies to get similar benefit as given by scheduled commercial banks,” said Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa.
“After announcing several relief measures in his previous address recently, to counter the economic slowdown, these new measures announced today will definitely bring adequate liquidity in system, facilitate bank credit flow, ease financial stress & help India emerge as a leader in a post COVID-19 world.,” said Lincoln Bennet Rodrigues, Founder and Chairman, Bennet & Bernard Group.