External commercial borrowing guidelines for real estate sector soon: Finance Ministry

NEW DELHI: Ahead of the monetary policy committee (MPC) meeting next month, Reserve Bank of India governor Shaktikanta Das met Union Finance Minister Nirmala Sitharaman on Tuesday to discuss macroeconomic issues including MSME loan restructuring, the upcoming loan mela and external commercial borrowing (ECB) guidelines for realty sector.

“The meeting was more to discuss macroeconomic issues. Apart from that, the RBI governor discussed external commercial borrowing guidelines for the realty sector, which it will release soon, as well as the upcoming loan mela and the issue of recasting stressed loans in the MSME sector,” a source from finance ministry told TNIE.

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On September 14, Sitharaman had said that in consultation with the RBI, ECB guidelines will be relaxed to facilitate financing for homebuyers eligible under Pradhan Mantri Awas Yojana. Also, the Finance Minister had last week said that banks will not declare stressed assets from the MSME sector as non-performing assets and will follow RBI’s January 1 circular to ensure that the MSME accounts are either restructured or remain in the stressed category.

“There is a long tradition that the governor meets the Finance Minister and discusses the overall macroeconomic position. So today’s meeting was basically that,” Das said after the meeting. 

The three-day monetary policy committee meeting will begin on October 1 amid expectations of a rate cut to be announced on October 4, in a bid to revive the sagging economy.

The RBI governor was also upbeat about the latest corporate tax deduction bringing higher investment into the country. “It is a very bold measure and it is a highly positive step. India’s corporate tax now becomes very competitive compared to other emerging market economies in ASEAN and other parts of Asia,” Das said.