RBI Announces Second Relief Package to Address NBFCs Woes
Apr 22, 2020 Real Estate News
The country’s economy has come to a standstill due to the nationwide lockdown for 40 days amidst the outbreak of Coronavirus. To boost the liquidity in the system, the RBI announced a slew of measures on April 17, 2020.
The RBI Governor announced the reduction of repo rate by 25 basis points bringing it down from 4 percent to 3.75 percent, lowest in the last fifteen years. The RBI also announced the infusion of Rs 50,000 crore into the system to help the banks, housing finance companies, and NBFCs under a new round of targeted long-term repo operations (TLTRO).
The measures are over the liquidity of Rs 3.74 lakh crore infusion hat RBI announced on March 27, 2020. The RBI also slashed the repo rate by 75 basis points on the same day, bringing it down to 4.4 percent.
While addressing the media on March 25, RBI governor Shaktikant Das stated that the banking regulators were open to using any instrument, conventional and unconventional, to reduce the impact of the virus outbreak on the economy.
Announcements made by RBI
It is expected that the country’s economy may be heading for a rare quarterly contraction in April- June due to the 40- day lockdown. The World Bank and IMF have predicted that the growth will slip to 1.5 percent to 2.5 percent and 1.5 percent respectively. However, Barclays has projected zero growth for 2020.
The RBI governor said that the mission is to minimise the epidemiological damage in the country, due to the Coronavirus.
The RBI Governor announced the reduction of repo rate by 25 basis points bringing it down from 4 percent to 3.75 percent, lowest in the last fifteen years. The RBI also announced the infusion of Rs 50,000 crore into the system to help the banks, housing finance companies, and NBFCs under a new round of targeted long-term repo operations (TLTRO).
The measures are over the liquidity of Rs 3.74 lakh crore infusion hat RBI announced on March 27, 2020. The RBI also slashed the repo rate by 75 basis points on the same day, bringing it down to 4.4 percent.
While addressing the media on March 25, RBI governor Shaktikant Das stated that the banking regulators were open to using any instrument, conventional and unconventional, to reduce the impact of the virus outbreak on the economy.
Announcements made by RBI
- Reverse repo rate reduction by 25 bps, bringing it down to 3.75 percent. For the uninitiated, the repo rate is the rate at which the RBI lends money to the public and private sector banks.
- A relief package of Rs 50,000 crore meant for NBFCs. Half the amount of the package is meant to be extended to help small and mid-sized NFCs and housing finance companies.
- A special refinance facility of Rs 10,000 crore for the National Housing Bank (NHB) to support HFCs.
- State to borrow 60 percent more via ways and means allowance.
- NPA classification excludes a three-month moratorium period till May end.
- Small and medium-size NBFCs to be benefitted by RBI stimulus
In the statement released by RBI, it stated that half the money from the 50,000-crore relief package announced is meant to fund small and medium-size NBFCs. The measure from RBI came after the realisation that despite slashing their lending rates, the bank was only lending money to big corporates and not the mid-size businesses or real estate companies. It is expected that after this step, the banks and NBFCs will provide the required liquidity to the sector.
- RBI also further extended the date of commencement of commercial operations of project loans for commercial real estate projects which have been delayed beyond their control.
It is expected that the country’s economy may be heading for a rare quarterly contraction in April- June due to the 40- day lockdown. The World Bank and IMF have predicted that the growth will slip to 1.5 percent to 2.5 percent and 1.5 percent respectively. However, Barclays has projected zero growth for 2020.
The RBI governor said that the mission is to minimise the epidemiological damage in the country, due to the Coronavirus.
Looking for property portal?
Related Articles
-
Tax Exemption on Buying Multiple Houses
Jul 18, 2018 -
Bhopal real estate is booming nowadays
Feb 23, 2016 -
-
