Aug 2020

Impact of latest RBI Monetary Policy Committee announcement on Real Estate Sector in India

Impact of latest RBI Monetary Policy Committee announcement on Real Estate Sector in India Update

Below are the inputs on behalf of the real estate sector on RBI's monetary policy review:

Manoj Gaur, MD, Gaurs Group and Chairman, Affordable Housing Committee, CREDAI (National)

"Real estate sector needs hand holding at this point in time. Though unchanged repo rate is understandable the need to have special measures in place cannot be denied. The buyers are coming back to the sector after realizing the importance of real estate asset backed by historically low EMIs, the developers too need some interventions that can help them expedite the process of development".


Dhruv Agarwala, Group CEO,, and

"As the economy is still to recover to pre-covid levels and the risk to aggregate demand in the near future remains high, it is important that the transmission of past rate cuts are more effectively passed on to consumers as well as industry. However, It is indeed heartening to hear that the average lending rates have fallen by close to 90 bps since March 2020. Additionally, the liquidity in the banking system seems to be at comfortable levels. Nevertheless, the RBI’s decision to provide additional liquidity to the tune of Rs 5,000 crore to NHB augers well for the stability of HFCs that will provide some growth impetus to the real estate sector in turn."


Uddhav Poddar, MD, Bhumika Group

"The main issue is that banks have not taken adequate steps to reduce the rates or to ease the liquidity. All the good steps taken by RBI earlier will not bear fruit if the banks don’t take necessary action at their level. Real Estate is badly affected due to the pandemic  and we need support from the banks by providing adequate liquidity to the sector and providing cheap home loans to the customers, to make sure the segment can flourish again. We have to understand that real estate is an integral part of economic growth as it is the largest employment generator".


Pradeep Aggarwal, Founder & Chairman – Signature Global Group & Chairman - ASSOCHAM National Council on Real Estate, Housing and Urban Development

"It was an expected move by the RBI to keep the repo rate unchanged and it is commendable that it is doing its part to ensure that the economy stays on the right path. However, the banks have not yet passed on the benefits to the consumers, which are not benefitting the real estate sector that in turn is affecting the allied industries too. RBI should take action so that banks should extend loans to the real estate sector. Liquidity crisis has to be tackled soon as the situation after Corona is dismal; this cannot happen until and unless banks take a firm decision to back the sector that has many allied industries attached to it".


Amit Modi, President (Elect) CREDAI Western UP and Director ABA CORP

Market experts predicted a repo rate cut by 25bps in today’s announcement by RBI, but fortunately the longing demand from real estate sector of loan restructuring was declared. With the consumer confidence low due to the ongoing pandemic situation, and real estate sector going through a period of strife, we appreciate the government’ efforts and keen eye to look into initiatives that will help us in generating more demand in the real estate market as well as helping millions of first time homebuyers to realize their dream.  Loan restructuring will strengthen the real estate outlook for developers in the coming years and pave way for a consistent growth.


Ashish Bhutani, MD, Bhutani Group

"RBI Monetary Policy Committee has kept the repo rates unchanged, even when market experts cited the conditions being favorable for it. This decision was taken due to the signs of revival, that the MPC has observed with unlock. However, the continuous surge in cases is constantly hampering the stability that commercial real estate needs for planning the expansion, mapping the already allocated funds, driving international investments, and dispersing some amount of capital to construction and permissions required.  We are hoping apex financial institutions assess the realty market closely to deliver, if not repo rate cuts then some other kind of relaxation to improve sentiments of associated stakeholders".


Dhiraj Jain, Director, Mahagun Group

India is going through one of the biggest economic crises because of the global pandemic situation, and real estate is also facing the pinch like other sectors. A sector that contributes handsomely to the GDP needs handholding and the developers are voicing their concerns in a bid to make the government pay heed to their demands. One of the demands is of loan restructuring will help tackle the liquidity crunch that real estate has been struggling with for quite some time now. Developers are not getting fresh loans or even the top-ups which are hurting the construction activities. Loan restructuring has been done for the MSMEs and we were expecting that the Apex bank would consider it for real estate too. Liquidity is a big concern and a halt in activities during the lockdown affected the cash flow. The government has to consider it in order to ensure the smooth functioning of infrastructural development.


Mohit Goel, CEO, Omaxe Ltd.

With sharp reduction in policy rates announced since March, a pause was always on the cards. But we expected the apex bank to announce some measures like restructuring of loans, which could have reduced the stress on the sector and given  boost to demand. However, the decision to constitute an Expert Committee under imminent banker KV Kamath to recommend financial parameters, along with the sector-specific benchmark for resolution plans is a welcome step. The infusion of Rs 5000 crore in NHB is also a step in the right direction to boost liquidity.


Vikas Bhasin, CMD, Saya Homes

The government and apex bank are making efforts like never before to overcome the damage done to the economy due to Covid-19. Repo rates are already at historic low and are benefitting the buyers. However, real estate is passing through a challenging phase and we would request the apex bank to consider one time loan restructuring that has been a long standing demand is warranted at the earliest.


Harvinder Singh Sikka, MD, Sikka Group

Real estate has been going through a challenging phase. Last financial year too, the situation was not good for the first 9 months and it got worse with the onslaught of global pandemic. It has become difficult for many developers to manage cash flow to meet the requirements of construction, salaries, vendor payment, and then at the same time they have the loan obligations. Overall sentiment needs boost and with one-time loan restructuring the confidence of the buyer will be back.


Raman Gupta, Director- Branding & Construction- GBP Group

In today’s announcement the apex bank has kept the repo rate unchanged to 4% which was an expected move to keep the economy of the country afloat amidst the pandemic. Being one of the major contributor to the economy of the country, the benefits provided to the sector will have a positive impact on the overall growth of the nation. With the schemes like CLSS & PMAY along with the low repo rates the customers are moving back towards the real estate sector. Along with providing one time loan restructuring to MSMEs we expect the apex bank to announce the same for real estate sector as well.


Ashok Gupta, CMD, Ajnara India Ltd.

We understand the status quo on repo rates but not a single word was said about one-time loan restructuring for the real estate sector. Such demand or need for restructuring is not happening for the first time. In 2008, RBI asked banks to restructure and around Rs 40,000 crore of debt was restructured across all sectors, which included real estate too. It proved beneficial for real estate as the infusion of funds helped the developers in completing the projects at hand and win the confidence of the buyers leading to the revival of the sector. Real estate needs last-mile funding and outstanding loans are acting as roadblocks; one-time loan restructuring will make the banks consider the credit requirements of developers, which in turn will help the developers in completing the stalled/delayed projects. The situation in 2008 arose because of the Lehman Brothers crisis and at that time loan restructuring helped revive the sector which saw a capital appreciation in properties in 2010 after a lull period of around two years. At present we have a similar situation at hand and thus the sector needs help from the government.


Mr Rakesh Reddy, Director, Aparna Constructions & Estates.

“The latest measures announced by the RBI are a welcome move. They are aimed at improving liquidity, facilitating credit flow, and easing the burden of loan payments. The decision to allot an additional Rs. 10000 crores to NABARD and National Housing Bank will ensure much-needed liquidity for NBFCs and the real estate sector. The loan resolution plan, which allows for payment moratorium up to 2 years for corporate and personal borrowers without classification as NPAs, will also help maintain cash flow. Keeping the repo rate unchanged at 4 percent is an accommodative policy stance. However, the transmission of the previous rate cuts must be implemented with immediate effect to successfully bolster the economy. While the economy is expected to regain its previous momentum once the COVID-19 pandemic is under control, these measures will boost market sentiment and allow the real estate sector to confidently resume critical operations.”


Mr. Rohit Gera, Managing Director, Gera Developments Pvt Ltd.

''The RBI has retained the benchmark rates unchanged in light of the outlook on inflation. In order to transmit earlier reductions,  banks and HFIs must be pushed to lower mortgage rates for home buyers.  This will provide an impetus to the housing industry''.

Updated: 8/7/2020 12:09:30 PM
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