Clipped from: https://economictimes.indiatimes.com/
According to Jaxay Shah, Chairman, CREDAI National, the RBI’s preponed monetary policy announcements to tackle covid-19 are short term piecemeal solution for a long term problem and the industry continues to wait for one-time restructuring of loans.
MUMBAI: The Reserve Bank of India’s decision to extend moratorium on term loans by additional 3 months is expected to help lower the burden of interest payments of realty developers and housing loan borrowers until August end.
The central bank has also lowered the repo rate by 40 basis points to 4% today after reducing it by 25 basis points mid-April and 75 basis points on March 27. The move expected to help realty developers avoid default in payments and any subsequent downgrades.
“The series of reduction in policy rates will help all sectors including real estate hit by contraction in demand and liquidity squeeze caused by the Covid19. However, we are hoping for a quick transmission of these actions in banks’ respective lending rates,” said Jaxay Shah, Chairman, CREDAI National.
According to him, these are short term piecemeal solution for a long term problem and the industry continues to wait for one-time restructuring of loans.
Borrowers availing moratorium are also allowed to spread their interest payments through the financial year end and to convert the accumulated interest for the moratorium period into a term loan.
“It will also provide some relief as the borrower will not have to immediately repay the accumulated interest on the loan after the moratorium ends,” said Niranajan Hiranandani, President, NAREDCO.
However, he also expressed the need for a one-time debt restructuring as that would act as a holistic measure to give breather to the industries across the board and help in its quick revival.