NHB, SIDBI, NABARD to Get Additional Rs 50,000 Cr; Reverse Repo Rate Cut By 0.25%

New Delhi: National Housing Bank (NHB), together with SIDBI and NABARD will be provided special finance facility to the tune of Rs 50,000 crore to meet their sectoral financing needs.

The Reserve Bank of India Governor Shashikanta Das today said that apart from this Rs 50,000 crore special finance facility, the Reverse Repo Rate will also be cut by 25 basis points. Thus the Reverse Repo Rate will now be 3.75 percent from 4 percent earlier.

However, there will be no change in the Repo Rate.

Das said that the RBI has decided to take additional measures to maintain enough liquidity in the system. Thus it has decided to have TLTRO operations of Rs 50,000 crore to begin with.

"There have been specific mention of lending to Real Estate Sector by NBFCs which reflects increased focus of the regulator on this sector. Developers now have additional one year to repay lenders which is over and above one year available so this will help management of cash flows and reduce asset classification stress of Real Estate focused NBFCs. Further, a window of Rs. 50,000 crore under TLTRO will provide incremental liquidity to NBFCs, MFIs which could be utilised for onward lending to real estate sector,” said Piyush Gupta, Managing Director, Capital Markets (India), Colliers International.

"Among the various measures announced, commendably its allotment of INR 10,000 crore to National Housing Bank is a big move for the real estate sector reeling under the liquidity crisis. It will help provide capital to HFCs and eventually provide major relief to developers battling liquidity issues in COVID-19 times. Further, RBI has reduced the reverse repo rates by 25 bps – it now stands at 3.75 percent. This is another big step as the rate cut will definitely send out positive signals in the current times, and will enable banks to lend even more," said Anuj Puri, Chairmna, ANAROCK Property Consultants. 

 "The current reduction in the reverse repo rate by 25 basis points to 3.75 percent from the earlier 4 percent will increase the much-needed liquidity in the market. With relaxation offered to NBFCs to extend the realty loans by a year, the real estate sector will have greater support in these difficult times. With inflation being at the lower side and greater transmission by banks and NBFCs, the real estate sector is likely to revive in the medium term from the impact of the current crisis," said Ankush Kaul, President (Sales & Marketing) - Ambience Group.

"The various measures announced by the RBI to maintain liquidity in the system and ease the flow of credit including reducing the reverse repo rate by 25 basis points will help ease some financial stress in the system. This move by the RBI will hopefully nudge banks to increase lending to various sectors of the economy, which is the need of the hour," said Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com

"I welcome the announcements made by the RBI Governor today. RBI has taken these measures as they realised that despite lowering of rates the banks were only lending to large corporates and not to mid size and small businesses or to real estate, hence RBI has provided liquidity to NBFC’s which mainly service the mid and small businesses and to the real estate sector. Real estate is a capital intensive business and needs liquidity infusion and we hope this and more steps from the RBI will prompt banks and NBFC’s to provide the required liquidity in the sector ," said Uddhav Poddar, MD, Bhumika Group

"The reduction in reverse repo rate by 25 basis points and infusion of Rs 50,000 crore in NBFCs as announced by apex bank is indeed a welcome move. Also, the restructuring for upto 1 additional year of loans has also been allowed to the real estate projects which will definitely contribute towards easing the liquidity crunch as well. We await further steps to be announced by the RBI as mentioned by the Governor," said Prateek Mittal, Executive Director, Sushma Group

"With Covid badly impacting the cash flow of all the sectors of the economy including real estate, most of the sectors will rely heavily on financial sector for survival. In such a scenario maintaining liquidity in the system becomes the key and today's RBI announcements are a step in the same direction. Hopefully, banks will also participate in the endeavor," Raman Gupta, Director- Branding and Construction, GBP Group

"The measures are initial steps but the sector needs huge infusion of money, which should be addressed immediately. Liquidity package should be immediately given to the sector which under severe stress. The recent announcements are not huge enough to take care of the liquidity needs. With the latest announcement it was clear that the government has realized the importance of real estate sector and so we demand that relief package should be announced at the earliest," Vikas Bhasin, CMD, Saya Homes