Noida: Builders, homebuyers welcome RBI decision to postpone EMIs on loans for realty sector

Developers and homebuyers on Friday welcomed the decision by the Reserve Bank of India (RBI) to defer payment of equated monthly installments (EMI) on all term loans,

Developers and homebuyers on Friday welcomed the decision by the Reserve Bank of India (RBI) to defer payment of equated monthly installments (EMI) on all term loans, including home and project loans, for the next three months in view of the disruption in economic activity following a 21-day nationwide lockdown enforced to check the spread of Sars-Cov-2 virus, which causes Covid-19. However, numerous builders have written to the government stating that EMI payment should be deferred for at least 6 months as all activities, barring essential services, have been suspended.

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“We had requested the government for a two-year moratorium on recovery of project loans from builders and homebuyers as the delivery of flats would be delayed due to disruption in construction in view of Covid-19. However, we welcome the RBI’s decision to defer EMI payment on all loans for next three months. We further request that the government postpone EMIs for next six months and, if needed, for longer to ensure realtors and homebuyers do not suffer,” said RK Arora president of Uttar Pradesh chapter of The National Real Estate Development Council (NAREDCO), a builders’ body.

Following the finance ministry’s announcements Thursday, the Reserve Bank of India’s cut the repo rate by 75 basis points to increase liquidity in the market.

“The move will push credit flow into all industries reeling under the impact of the global pandemic. It will effectively benefit all sectors, including real estate. Given this time period, the RBI will ensure that the benefit of the rate cut is directly passed on to actual consumers, which could eventually translate into more home loan takers,” said Anuj Puri, chairman of ANAROCK Property Consultants.

Satish Magar, national president, Confederation of Real Estate Developers Association of India (CREDAI), said, “Reduction in repo rate, additional liquidity of about ₹3.74 lakh crore induced reduction in CRR, long-term repo operations and enhancement of marginal standing facility and the moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020, are all timely and well-intentioned measures by the RBI to address the financial stress owing to COVID-19.”

Homebuyers also echoed builders’ sentiment on extending the period of exemption.

“Because Covid-19 is impacting the economy hugely, the government should extend the EMI relief for at least a year. The immediate three months of relief is surely a welcome step,” said SK Nagrath president of Jaypee Aman buyers association.

More clarity on the moratorium is expected over the next few days from the lenders whose boards will have to approve it.