More credit support to developers will help them complete stuck projects faster.
Finance Minister Nirmala Sitharaman August 23 said banks have assured they will pass on all rate cuts to MCLR to borrowers. This will result in existing home loan customers getting the benefit of lower rates.
The government will also establish an organisation to provide credit enhancement for infrastructure and housing projects, the finance minister said. With more credit support to developers, there will be fast-tracking in completion of stuck projects.
The real estate sector has welcomed the slew of measures to revive the economy especially the decision to offer more credit support for the purchase of homes. Banks have also assured they will launch a range of repo rate-linked products to ensure faster transmission of policy rates to homebuyers.
“This is a major boost to the slowing economy that comes literally in the nick of time… the FM today has hit a sixer with a slew of announcements for the banking and financial sector including NBFCs, HFCs and even MSMEs,” said Anuj Puri, Chairman – ANAROCK Property Consultants.
“The announcement to offer more credit support for the purchase of homes, vehicles, and consumption goods is an extremely welcome move which does not come a moment too soon. This move gives major liquidity support of an additional Rs 20,000 crore to HFCs and this will significantly improve the momentum of lending to cash-strapped developers by the NHB. Many developers will now be able to complete their projects stuck or delayed which were languishing due to lack of funds – thereby benefiting their buyers directly,” he said.
Gagan Randev, National Director, Capital Markets & Investment Services at Colliers International India said the decision that banks will pass on rate cuts to MCLR to all borrowers is very welcome as it will finally result in existing home loan customers getting the benefit of lower rates and lower effective EMIs.
The realty sector also said it will await specific measures for the housing industry.
The FM had ended the presser saying concerns of the real estate sector will be addressed shortly.
Shishir Baijal, Chairman and Managing Director, Knight Frank India, said these steps will help in confidence building, especially for segments like auto and MSMEs and even real estate.
The release of funds for PSUs and the credit support for HFCs, as well as the NBFCs, will provide some relief to the financial sector currently under pressure on account of NPAs. We expect these measures to have an impact on the stressed assets that are awaiting completion. For the real estate sector specifically, the alignment of the bank lending rates to the REPO rate will have a significant impact. This has been a long-standing demand for banks to pass on the benefits of lowering repo rates, Baijal said.From the perspective of real estate, infrastructure and construction, it translates into good news. Effectively, the interaction with real estate stakeholders on August 11 seems to have received the minister’s attention, and the twin problems of liquidity crisis and fiscal stimulus seem to have received a positive response, said Niranjan Hiranandani, Founder and MD, Hiranandani Group and President of National Real Estate Development Council (NAREDCO).