"The specifics, on the other hand, while broadbased, may not be sufficient to create a virtuous cycle of demand recovery given that the level of pessimism is extremely high, that more is required to lower the real estate inventory and to restart the cycle of lending by the NBFCs," said the report on the latest measures announced by Finance Minister Nirmala Sitharaman.
It, however, noted that three important takeaways from the announcements were "some preponement of demand in autos (PVs from fleets, LCVs) that can help reduce excess inventory in the near-term, faster payment of GST refunds to MSMEs can help address some amount of liquidity concerns, and that more measures are coming to revive the real estate sector".
On the measures announced to boost auto sales, the report noted that the auto sector may benefit marginally.
The government announced an additional 15 per cent depreciation on all vehicles acquired during the period from now till March 31, 2020. According to JM Financial, this move is likely to aid clearing of some of the inventory for personal vehicles (PVs) and light commercial vehicles (LCVs).
On the steps to ease liquidity for the NBFCs and the housing finance companies (HFC), it noted that the steps would benefit granular retail housing, vehicle finance and MSME loans.
"The government increased the outlay for Liquidity Infusion Facility refinance scheme of NHB (National Housing Bank) from Rs 100 billion (10,000 crore) to Rs 300 billion (30,000 crore). Additionally, public sector banks (PSBs) have been asked to fast-track collaboration with NBFCs for co-origination of loans to MSMEs, small traders' self-help groups and MFI (micro-finance institutions) client borrowers.
"Further, we also await the measures to address the pain of home-buyers where the project is stuck due to lack of funding for the developer. In our view, these steps will benefit granular retail housing, vehicle finance and MSME loans," it said.
The report further observed that the actual requirement is to address the heightened level of risk aversion in the banking sector concerning developer or large 'loans against property' (LAP) exposures of NBFCs and HFCs. Otherwise, these measures will continue to result in the PSBs increasing their exposure to a couple of well-managed, strong promoter backed NBFCs and HFCs, it said.
"They might not increase their exposure to NBFCs and HFCs with significant developer and large-ticket size LAP portfolios," it added.