RBI’s Resolution 2.0 to Provide Relief to Real Estate Linked SMEs

RBI’s Resolution 2.0 to Provide Relief to Real Estate Linked SMEs
May 2021 , by , in Interviews

Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India, “The battle with COVID-19 has prolonged over a year now and while the country was coping well until early this year, the second wave of infections in March has translated into significant loss of lives. Presumably on economic output, the dent will depend on the timeline of this wave and associated regional lockdowns. Hence, proactive measures by the RBI are welcome and reassuring. Expansion of liquidity window particularly to the healthcare sector is a need of the hour. Besides, additional liquidity window and resolution mechanism for loan restructuring for small and medium business will cement their position to cope up with the adverse demand conditions created by this more severe wave of pandemic. We believe that the central bank will keep its guard on in the ensuing period and take steps as warranted by the evolving on ground economic situation.”

Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE, “With today’s announcement, RBI focused on the revival of the Indian economy by adding adequate liquidity that ensures further stability of the overall market in the current scenario. The COVID loan scheme will boost economic activity and aid the growth of the MSME’s sector as well. The announcement of restructuring of loans for small borrowers is a proactive move as it will provide some relief against asset downgrade and also provide relief to lenders. Liquidity support to the healthcare sector is also a commendable step. These decisions by the central bank to tackle the current situation are much appreciated and well-timed to ensure stability and economic revival.”

“RBI’s unplanned announcement today reflects seriousness and urgency to address financial challenges due to the current Covid 19 situation. The clear focus with today’s announcement is creating a pool of liquidity for augmenting medical infrastructure and small businesses/ individual borrowers who have borne the maximum brunt due to uncertainties in the Business. An on-tap liquidity window of ₹50,000 crores with tenors of up to three years at the repo rate is being opened till March 31, 2022, for ramping up COVID-related healthcare infrastructure and services in the country. An initiative like Special Long-Term Repo Operations for Small Finance Banks for on-lending to individual borrowers shall help the smaller entrepreneurs, and Resolution Framework 2.0 for COVID Related Stressed Assets of Individuals, Small Businesses, and MSMEs for borrowers below Rs. 25 crores. The most vulnerable shall benefit from restructuring the loans impacted by Covid 19. The key Real Estate Service Providers like Labour and Service Contractors, suppliers of materials are also likely to benefit from the MSMEs.” Piyush Gupta, Capital Markets & Investment Services (India) at Colliers.

Dr. Samantak Das, Chief Economist and Head of Research & REIS, JLL India, “RBI has proactively stepped in to address the financial challenges arising due to the second wave of the pandemic. The Central Bank has announced a COVID loan book to support those directly involved in addressing the pandemic (healthcare sector) with on-tap liquidity of INR 50,000 crore to banks. RBI has also recognised the hardships faced by individuals, small businesses and medium and small enterprises due to the lockdown and provided Resolution 2.0 measures for restructuring loans to small borrowers up to Rs 25 cr. Other than individual borrowers, this will provide major relief to real estate linked SME players especially suppliers of input material for the sector. The working capital review will also help these stakeholders to tide over their liquidity issues as their cash flows have been partly impacted due to the recent lockdown restrictions in various states.”


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