RBI gives major boost to real estate sector through additional Rs 50,000 cr infusion via LTRO

The Reserve Bank of India Friday gave a major boost to the real estate sector by giving an additional Rs 50,000 crore through targeted long-term repo operation (TLTRO) to be undertaken in tranches – a move that has been hailed by both NBFCs as well as the real estate sector.

The RBI governor Shaktikanta Das announced a re-financing window of Rs 50,000 crore for financial institutions like Nabard, National Housing Bank and Sidbi. Source - Reuters.

The Reserve Bank of India Friday gave a major boost to the real estate sector by giving an additional Rs 50,000 crore through targeted long-term repo operation (TLTRO) to be undertaken in tranches – a move that has been hailed by both NBFCs as well as the real estate sector. The RBI governor Shaktikanta Das announced a re-financing window of Rs 50,000 crore for financial institutions like Nabard, National Housing Bank and Sidbi.

He further said surplus liquidity in the banking system has increased substantially as result of central bank's actions. Stating that the RBI is monitoring the situation developing out of Covid-19 outbreak, he noted that the contraction in exports in March at 34.6 per cent was much more severe than global financial crisis of 2008-09.

The announcements reflect increased focus of the regulator in these sectors, believes Piyush Gupta, Managing Director, Capital Markets at Colliers International India.

TRENDING NOW

“There have been specific mention of lending to Real Estate Sector by NBFCs which reflects increased focus of the regulator on this sector. Developers now have additional one year to repay lenders which is over and above one year available so this will help management of cash flows and reduce asset classification stress of Real Estate focused NBFCs. Further, a window of Rs. 50,000 cr. under TLTRO will provide incremental liquidity to NBFCs, MFIs which could be utilised for onward lending to the real estate sector,” he said.

WATCH Zee Business TV LIVE Streaming Online

The investment under LTRO will be helpful for NBFCs, said V K Vijayakumat, Chief Investment Strategist at Geojit Financial Services.

"Particularly, announcement of LTRO 2 of Rs 50000 cr for targeted funding to NBFCs and MFIs will be beneficial for this segment. Refinancing of Rs 50000 cr to Nabard, SIDBI and NHB is another welcome move. The reclassification of NPA norms from 90 days to 180 days is a great relief to commercial banks. In brief, this is a big bazooka but with caution and prudence. Enhancement of Ways & Means advances to states by 60 % will be a relief to states stressed by the pandemic,” he said.

TAGS: