RBI’s latest announcement of a massive repo rate cut of 75 bps coupled with three months moratorium of EMIs on all outstanding loans is the biggest move that India has so far made to counter the COVID-19 fallout. The move will push credit flow into all industries reeling under the impact of the coronavirus.
The repo rate cut will I fuse cash flows into the system and ensure that consumption disruption is minimised. It will effectively benefit all sectors, including real estate.
Given this time period, 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. Additionally, this move of the RBI encourages banks to lend more and also enable industries to borrow.
The moratorium of three months of EMIs on all outstanding loans will be a major relief to all concerned stakeholders, including home loan borrowers and developers. Developers now get breathing space to get their financial act together, at least for now. Moreover, the fact that non-payment of EMIs will not cause loans to turn bad is a major relief.
All in all, this big-bang announcement by the RBI will benefit all industries in the country and is undoubtedly the most convincing intervention yet to tame a major economic crisis in the country.