Property: Special Rs 10,000 RBI refinancing package to NHBs, NBFC hailed by realtors

Property: In a bid to provide liquidity support to the national economy during the Coronavirus lockdown extension, the Reserve Bank of India (RBI) today announced special Rs 10,000 crore refinancing package to the National Housing Banks (NHBs) and Non Banking Financial Companies (NBFCs). The move has gone down well among the real estate sector as they feel that the RBI's step will benefit both housing and commercial real estate. Real estate experts also hailed RBI for allowing NBFC loans to delayed commercial real estate projects to be extended by a year without restructuring.

Hailing the RBI move for providing liquidity to boost the national economy, Anuj Puri, Chairman – ANAROCK Property Consultants said, "In a major move to boost liquidity in the market, the RBI today announced several additional measures to accelerate the economy and facilitate bank credit flows in Lockdown 2.0. Among the various measures announced, commendably its allotment of Rs 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." 

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Puri went on to add that the RBI has reduced the reverse repo rates by 25 bps – it now stands at 3.75%. 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.

Also, in another major relief to developers, the RBI has further extended the date of commencement of commercial operations (DCCO) of project loans for commercial real estate projects which are delayed for reasons beyond the control of promoters. This is indeed a big move and will bring much-needed relief to cash-starved developers. It will help in easing out time for maintaining and managing cash flows for these developers.

Speaking on the RBI's move Kaushal Agarwal, Chairman,The Guardians Real Estate Advisory said, "Liquidity, Recapitalisation & increased access to funds for MSME’s is the crux of the announcements made by the RBI Governor. The RBI’s decision to reduce the reverse repo rate further by 25 bps and reduction in LCR, will help bring liquidity in the market place with banks lending further. Crucially, the banks need to give up the cautious lending approach to ensure delivery of RBI measures on the ground. The refinance facilities of Rs.50,000 crores for NABARD & NHB, and mandatory 50% investment of TLTRO-2 to small, mid-sized NBFC’s will bring much needed capital for HFC’s & NBFCs, a move that was much required. The extension of realty loans by a year and NPA Classification relief for SMA accounts will go a long way in helping developers and MSME’s tide over the ongoing crisis.”

Ramesh Nair, CEO & Country Head at JLL India said, "As per the latest data by RBI, NBFCs outstanding credit to the commercial real estate stood at INR 1,29,359 crore as of end September 2019. The relaxation of NPA classification norms and extension of one year for commencement of projects to real estate developers by NBFCs will provide the much needed relief to the sector."