The Reserve Bank of India’s Bimal Jalan Committee on appropriate capital reserves may well identify an excess buffer of up to Rs 3 trillion for transfer from RBI reserves, will provide a push to liquidity in real estate.
According to Bank of America Merrill Lynch , as of September 2018, there was excess capital of Rs 9.6 lakh crore with RBI. Halving of the contigency reserves to a level of 3.25% from the present 6.5% will release Rs 1.282 lakh crore. Capping the overall reserves at 20% level from the present 25.5% will release Rs 1.96 lakh crore. This level is higher than the 2004 Usha Thorat committee recommendation of 18%.
Using the excess money for bank recapitalisation will be liquidity neutral.
Says Pradeep Aggarwal, Chairman, Assocham National Council on Real Estate,Housing & Urban Development and Founder & Chairman of Signature Global, ” Considering the liquidity challenge being currently faced by the real estate sector, the RBI move to recapitalize is a healthy development. RBI, besides undertaking dollar swapping, plans to buy Rs 25000 crore worth bonds in May, will help ease liquidity in the system, in turn giving the much needed liquidity push to realty”.