Covid-hit realtors, hoteliers hail RBI's liquidity support but seek more

NEW DELHI:  The Reserve Bank of India (RBI)’s decision to keep repo rate and reverse rate unchanged at 4 per cent and 3.35 per cent, respectively, was widely welcomed by the real estate sector which is reeling under the impact of second covid-19 wave.

According to the industry, this will continue to keep floating retail loan rates (which are directly linked to external benchmark repo rates) at a lower level.

“While the sectoror has been severely impacted in the second lockdown, the problems have been aggravated with a considerable rise in the cost of raw materials such as steel and cement.  In such a scenario, an unchanged repo rate makes more sense than an increased one which would have added more pressure on the sector,” said Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani.  

He however, said that there was a need for stimulant policy measures that would enhance liquidity for the sector, ease credit provisions and increase buyer’s confidence.

“Any announcements in these fronts would have been appreciated.”

After sales peaking to pre-covid level in the first quarter of 2021, demand for housing units has fallen significantly in the last two months due to lockdowns and record rise in Covid-19 cases. 

Lincoln Bennet Rodrigues, founder and chairman of Bennet & Bernard Group which is known for luxury holiday homes in Goa said, “A rate cut would have been beneficial for the consumers and would have given a boost to current demand uptick that we have seen recently. Going forward, we would also like to see a reduction in stamp duty and registration charges to push demand further in the real estate sector that forms the backbone of several other sectors.” 

Beside keeping the benchmark rates unchanged, RBI governor Shaktikanta Das announced a separate on-tap liquidity window of Rs 15,000 crore for contact-intensive sectors like restaurants, hotels and those involved in the tourism sector.

“It has given an additional lease of life to several hospitality establishments that are on the brink of closure. Ailing hotels will be able to save related lives and livelihoods,” said KB Kachru, VP, Hotel Association of India. 

‘Extend loan tenors for minimum five yrs’

Gurbaxish Singh Kohli, VP, Federation of Hotel & Restaurant Associations of India said that they would request the RBI to extend the loan tenure for at least five years.

A duration of three years, he said, is just not sufficient to recover from the financial crisis.