RBI’s Announcement Misses Out Fiscal Stimulus for Real Estate

Amid the raging second wave of the Covid-19 in India, the Reserve Bank of India (RBI) on Wednesday unveiled a slew of measures to boost liquidity available to the healthcare sector and ease the pain of small borrowers. The central bank opened a liquidity window of Rs 50,000 crore with tenors of up to three years at the repo rate till the end of the current fiscal.

The aim of this on-tap window is to boost the provision of immediate liquidity for ramping up Covid-related healthcare infrastructure and services in the country. Under this scheme, banks would provide fresh lending support to a wide range of entities including vaccine manufacturers, importers and suppliers of vaccines and priority medical devices, hospitals and dispensaries, pathology labs, manufacturers and suppliers of oxygen and ventilators, importers of vaccines, and Covid-related drugs, logistics firms and also patients for treatment.

Welcoming the move, Sarthak Gaur, Director, Gaurs Group, added that the country's current condition must be balanced with calibrated, sequenced, and well-timed policy steps. “The relief provided to vulnerable category borrowers, such as individuals, small businesses, and MSMEs, is much-needed, as localized restrictions have disrupted them. The improvement in this segment would lead to an improvement in the mall segment, which has been in a difficult situation in some cases due to losses faced by the retailers. Overall, the first round of announcements was fair and balanced, addressing the most pressing issues,” he said.

Amit Modi, Director ABA Corp and President (Elect), CREDAI Western UP, said while the RBI eased lending and restructuring norms for all stakeholders, particularly those smaller businesses and MSMEs that have been impacted by the second wave, the government should also take into consideration the needs of the real estate sector. “We are confident that it will amplify the positive sentiment seen in the first quarter of 2020-21 across all sectors, including the real estate market. We anticipate that the sector will be given due consideration in the next round of announcements, allowing for further progress,” he said.

Akshay Taneja, MD, TDI Group, added that the absence of a moratorium announcement will be viewed positively by the market, implying that the situation is not dire enough to warrant another moratorium. “The RBI's actions are unlikely to give the market a big boost, but they are likely to provide downside support and boost morale. However, the pandemic has had a wide impact on the industry. A rollout of wider relief initiatives aimed at mid-corporate and large borrowers, and industries heavily affected by the pandemic, such as real estate, hospitality, would have been beneficial,” he explained.