RBI Provides Additional ASLF Of Rs 5,000 Crore To National Housing Bank

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The facility will be for a period of one year and will be charged at the RBI’s repo rate.

The Reserve Bank of India (RBI) on 6th August provided an additional standing liquidity facility (ASLF) of Rs 5,000 crore to National Housing Bank(NHB). This is over and above Rs 10,000 crore already provided for supporting housing finance companies(HFCs). 

The facility will be for a period of one year and will be charged at the RBI’s repo rate.

ASLF is being provided to shield the housing sector from liquidity disruptions and augment the flow of finance to the sector through housing finance companies (HFCs), said Shaktikanta Das, governor, RBI.

In its third bi-monthly monetary, the central bank has decided to keep the repo rate unchanged at 4 per cent. It also kept the reserve repo rate remain at 3.35 per cent. The pause has come after two consecutive rate cuts.

“A Positive step by Reserve Bank of India to pay heed to India Inc’s long pending demand of One-time restructuring of loans without classifying them as NPAs, by setting up an expert committee steered by KV Kamath. Opening up the window for restructuring of loans to companies, individuals and MSME under mandated safeguards grants breather to the liquidity strapped industry. A flexible repayment scheme under the new resolution framework shall bring in the much-needed relief to resume operations smoothly. He additionally acknowledged the fact accorded by the RBI governor of maximum transmission of rate cut benefits percolating down the banking stream, which shall be reflected in easing the credit supply to meet working capital needs of the Industry across the board. Additionally, liquidity of Rs 10,000crores announced to be infused in NABARD and NHB will definitely aid the reeling sector to tide over the liquidity crisis”. This indicates that the fiscal measures by RBI have started showing the positive outcomes on the economy, he concluded”, said Dr. Niranjan Hiranandani, President, Assocham & NAREDCO 

“The RBI has approved a long pending demand of the real estate sector to allow one-time restructuring of loans. This will boost the much-needed liquidity and streamline stressed assets in the real estate sector. But this restructuring comes with a stipulation and It will be implemented by March 31, 2021. It would have been an icing on the cake, had the RBI considered the net worth positive projects and allowed one-time restructuring for all the projects, which were held up. On the other side, the move will upscale the efforts of the realtors to revive the housing demand by selling-off unsold housing inventories too. Another Rs 10,000 crore window facilitated through the National Housing Bank & NABARD will shield the housing sector from liquidity disruptions and will augment the flow of finance to the sector through housing finance companies. This provision will reduce the stress being faced by smaller non-bank finance companies and micro-finance institutions in obtaining access to liquidity, said Mr. Rajan Bandelkar, President, NAREDCO West

“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”, said Mr. Manoj Gaur, MD, Gaurs Group and Chairman, Affordable Housing Committee, CREDAI (National).

“RBI focusing on augmenting liquidity with an accommodative stance with no rate cut is a smart move in terms of channelizing the demand-based macros in the economy. As liquidity in the system is important to allow the financial institutions to transmit RBI’s rate cut benefits with reduced loan interest rates to the borrower, Additional Specialty Liquidity Facility (ASLF) is thereby, seen as a welcome move. ASLF of Rs 5000 crore to the National Housing Bank will provide much required cushioning for the housing finance companies to lower the home interest rates. This will translate into an upsurge in demand with a lower cost of credit to the home buyer and materialize in a likely upsurge in residential inventory offtake especially in the near onset of festivity in the country”, said Mr. Rohit Poddar, MD, Poddar Housing and Development Ltd and Joint Secretary, NAREDCO Maharashtra on RBI’s MPC announcement.

“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”, said Mr. Pradeep Aggarwal, Founder & Chairman – Signature Global Group & Chairman – ASSOCHAM National Council on Real Estate, Housing and Urban Development

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”, said Mr. Amit Modi, President (Elect) CREDAI Western UP and Director ABA CORP

“Much along the expected lines, the RBI kept repo rate untouched at 4% and reverse repo rate at 3.35% amid a recent rise in retail consumer prices. The RBI was expected to do all it can to keep the inflation rates reined in for the duration. 

However, the RBI announced several additional measures that will go on to accelerate the economy, enhance liquidity, improve flow of credit and deepen digital payment facilities, among others. Commendably, its allotment of INR 5,000 crore each to National Housing Bank and NABARD is a much-needed step for sectors including real estate reeling under the liquidity crisis. It will help infuse capital into the HFCs and eventually provide relief to developers battling liquidity issues in COVID-19 times”, said Anuj Puri, Chairman – ANAROCK Property Consultants

“With a 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 the 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”, said Mohit Goel, CEO, Omaxe Ltd.

“The RBI’s Rs 5,000 crore support to National Housing Bank (NHB) will give the housing sector a boost and benefit both developers and buyers. With greater finance flow, the developers in need of small capital can now complete their stalled projects. Along with this, the window to enable MSME lenders to restructure loans will ease the burden on genuine borrowers.  Incentives to banks to lend to the priority sector should also be transferred to NBFCs and HFCs, as affordable housing is also one of the priority sectors and a key industry for the economy. Not cutting the rates any further will protect the returns of savers and will not push borrowers, including banks and NBFCs, to lend any further and help in maintaining asset quality in stressed sectors. Maintaining an accommodative stance indicates the RBI will intervene to provide the right push and direction to growth when the economic activities start picking up in future” said Mr. Ravindra Sudhalkar, CEO at Reliance Home Finance

“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”, said Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com

“The RBI’s decision to keep the accommodative stance on key policy rates comes on expected lines. The Central Bank has already reduced the repo rate by more than 160 bps in the past 12 month’s period. With concerns over high food inflation and rise in Consumer Price Index (CPI), economic uncertainty, markets continue to remain in turmoil. In such a scenario, several additional sops are required to strengthen the hands of consumers. All of these have a direct bearing on the real estate market too. Due to the current caution, homebuyers, in general, are either postponing their purchase decision or are reducing their investments budgets. This said, we expect the market to certainly revive once there is a cure to pandemic and the spread of the virus is arrested” said Mr. Ankush Kaul, President (Sales & Marketing), Ambience Group.

“The RBI was expected to announce a status quo on rates after multiple and significant repo rate reductions over the past few months. The move to offer a further Rs.10,000 crores to NABARD & NHB will help bring liquidity to the sector. The 90% lending against gold will make it easier for the middle class to avail liquidity. It is important now for the RBI to further reduce the reverse repo to help banks lend further and let go of the cautious approach that has been adopted currently. Importantly, the move to form an expert committee to examine the one-time restructuring of loans will significantly help borrowers mitigate the impact of COVID-19 and the subsequent lockdowns”, said Mr. Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory

“RBI policy has been very balanced. While interest rates have been kept unchanged, the intention to support the borrowers and the lenders through this pandemic crisis is clear. The final impact would be determined by the recommendations of K V Kamath Committee, which will be very closely watched”, said Nikhil Gupta, Economist – Institutional Equities, Motilal Oswal Financial Services Ltd

ALSO READ: RBI Announces Additional Liquidity Facility Of ₹10,000 Crore For NHB And NABARD

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