“Accommodative Policy’ Stance is a Big Positive

“Accommodative Policy’ Stance is a Big Positive
May 2020 , by , in Realty+ Connect

Manju Yagnik, Vice Chairperson, Nahar Group and Vice President NAREDCO (Maharashtra)

“With RBI announcing rate cuts, thus maintaining the ‘Accommodative Policy’ stance is a big positive as it indicates their intent to ease the EMI burden of the customers. This reduction in repo rate will encourage prospective homebuyers to move ahead with their plans of investing in a home, thus help in boosting the demand. It will also enable reviving growth in the long-term. RBI’s has announced a cut in repo rate by 40 bps, from 4.4% to 4% and subsequently, the reverse repo rate cut by 40 bps to 3.35%. This will reduce the EMI burden of home buyers and discourage banks to park their additional funds with RBI, thus help increasing lending activity.

 

However, another significant measure is an extension in loan moratorium for another 3 months w.r.t. term loans and working capital loans. This will provide relief for all stakeholders affected by the disruption created by COVID19. Effectively the moratorium will be now till August 31, 2020. The special refinancing facility of Rs 15,000 crore to SIDBI at repo rate for 90 days for lending and refinancing operations have been further rolled over for another 90 days. This will provide additional liquidity support to the MSME sector. With RBI being in the forefront in the fight against COVID19, is making all-out effort to bring the economic activity back on track by announcing measures across sectors. 

 

However, RBI estimates that GDP growth may be negative for FY21but the fact that monetary policy transmission is improving coupled with the expectation of normal monsoon which will spur economic activities.”

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