RBI finally takes steps to counter coronavirus lockdown

Repo rates remained unchanged by RBI
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RBI has taken steps to tackle the impact of the coronavirus lockdown. It has reduced the Repo rate and the reverse repo rate, also allowed a three month moratorium on installments for loans.

By Varun Singh

RBI has finally taken some steps to counter the impact, that the coronavirus lockdown will have on our economy.

The real estate industry for almost a week has been crying hoarse that steps from RBI was needed so that they can tackle the lockdown.

Finally the RBI on Friday morning announced steps it has taken to tackle the entire lockdown. RBI has cut the repo & reverse repo rates by 75 and 90 basis points.

According to RBI, during the month of March so far, banks have been parking close to Rs 3 lakh crore on a daily average basis under the reverse repo , even as the growth of bank credit has been steadily slowing down.

RBI says, “This decision and its advancement has been warranted by the destructive force of the corona virus.”

RBI also announced Moratorium on Term Loans. The RBI has permitted all banks to allow a moratorium of three months on payment of installments in respect of all term loans.

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Vinod Jethwa a tax consultant says, this step means great relief for the common man.

According to Jethwa, no ECS will be deducted for three months on any of the loans by any lending institutions.

There was a constant demand from various quarters including homebuyers, politicians and developers to defer EMIs.

Meanwhile, the real estate industry is relieved with the steps taken by RBI. Here are some of the responses.

Kaushal Agarwal, Chairman, Director, The Guardians Real Estate Advisory, said “The 3 month moratorium for borrowers is a huge relief for individuals. The reduced repo rate will reduce the borrowing cost for the home-seeker significantly and have a positive impact on Real Estate.”

Rajan Bendelkar, President, Western Region, NAREDCO, said, “A moratorium of three months on repayment of loans and interest thereon, with a further assurance of not classifying such assets for downgrading, will give relief to the homebuyers and businesses.”

“The relief given on the repayments in term loans is indeed a very timely action and would serve to remove lot of stress which a large number of borrowers may face in the coming days. This is a direct and targeted approach to the fluid situation in the face of an uncertain inflation and growth trajectory. This scaffolds the positive impact of the fiscal measures and strengthens our response to the adverse economic impact of the pandemic,” said Dr. Joseph Thomas, Head of Research – Emkay Wealth Management on the RBI announcement.

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