RBI governor Shakitkanta Das on Thursday said that additional special liquidity facility of Rs 10,000 crore will be provided at the policy repo rate consisting Rs 5,000 crore to the National Housing Bank (NHB) to cushion the housing sector from liquidity disruptions and boost flow of finance to the sector through housing finance companies (HFCs).
Another Rs 5,000 crore will be given to the National Bank for Agriculture and Rural Development (NABARD) to reduce the stress being faced by smaller non-bank finance companies (NBFCs) and micro-finance institutions in obtaining access to liquidity, Das added.
Earlier, RBI had kept repo rate unchanged at 4 per cent. RBI has already cut interest rates by 115 basis points this year, taking the repo rate down to 4 per cent, the lowest since it was introduced in 2000.
"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.
"The extension of the MSME restructuring and the opening up of restructuring window for corporates, personal loans and MSME's ,along with additional liquidity to NHB and NABARD, is indeed a welcome move for the liquidity strapped sectors. Besides increase in LTV for gold loans is yet another significant step. Overall it was a balanced policy with MPC delivering on all fronts and exemplifying the need to use policy space judiciously to maximize its beneficial impact on the economy," said Jyoti Vaswani, CIO, Future Generali India Life Insurance.
"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 Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory.
Meanwhile, Das said that the GDP growth in the first half of the year is estimated to remain contracted. For the year 2020-21 as a whole, the real GDP growth is also estimated to be negative. The MPC believes the CPI inflation will remain elevated during the current July-September quarter, the Governor added. Supply chain disruptions persist, resulting in inflation pressures across segments, RBI Governor Shaktikanta Das said while announcing the decisions taken by the central bank's MPC. He added the continuous rise in COVID-19 cases have subdued revival in major economies across the world and that the global economic activity remained fragile.