The Reserve Bank of India’s additional measures to support the economy including one-year extension for commencement of commercial operations (DCCO) of project loans for real estate projects that are delayed for reasons beyond the control of promoters are expected to provide relief to real estate sector.
The central bank’s decision to reduce reverse repo rate by 25 basis point and additional liquidity for the National Housing Bank (NHB) will also accelerate and facilitate bank credit flows towards to the beleaguered sector in the wake of Covid19 crisis.
Realty developers expect the RBI’s measures to provide the liquidity boost to the realty sector and ease the impact of business interruption caused by the global pandemic.
“One year’s extension of DCCO will provide relief to non-banking finance companies (NBFCs) and housing finance companies (HFCs) and to the sector at large. We are hopeful that the government will soon aid the sector with the announcement of the much needed economic package,” said Jaxay Shah, National Chairman of realty developers’ body CREDAI.
Following the central bank’s move to cut reverse repo rate by 25 basis points, it now stands at 3.75% and will enable banks to lend more.
“The RBI announcement today is constructive, commendable and is in favour to support the financial system and at the same time the Indian real estate sector… This comes as a big relief to borrowers and lenders,” said Deo Shankar Tripathi, MD & CEO of Aadhar Housing Finance.
According to him, prevailing confusion on asset classification of loans has been put to an end with the announcement. With this, standard classification status of loans as of 1st March will exclude the 90 days moratorium period from 1st March to 31st May, which means status of loans shall remain at a standstill till 31st May.
The central bank also added that it is monitoring the situation very closely and will continue to make changes as and when required.