By Accommodation Times News Services
The Reserve Bank of India (RBI) kept the repo rate unchanged at 6.75% after a monetary policy review. The central bank also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liability (NDTL). Retaining the easing stance of monetary policy, the RBI said that it will use the space for further accommodation when available while keeping the economy anchored to the projected disinflation path that should take inflation down to 5 per cent by March 2017.
Real estate industry’s was not too happy after the RBI kept the repo rate unchanged at the monetary policy review. The experts comments were as follows:
Mr. Shishir Baijal – Chairman & Managing Director Knight Frank India, “In line with our anticipation, the RBI has kept the rates steady. In real estate we do not see any dampening of spirits as a total of 125 bps cut in the rates is already done across the year and now much depends on how banks transmit the benefit to home buyers. Further, regardless of this cumulative cut, banks on their own should be able to transmit more benefit to the end consumers as the cost of funds is becoming cheaper with improved liquidity conditions. Factors like a relook at the pricing strategy by the developers and abiding by project completion timelines and the overall economic growth also stand crucial.”
Mr. Ashwin Sheth, CMD, Sheth Corp Ltd., “The RBI Policy announcement by Dr. Raghuram Rajan, RBI Governor keeping key policy rates unchanged at 6.75% did not meet expectations of the real estate industry. Though a balanced move, RBI could have done much more. However, the rate cut would have helped in lowering the home loan interest rates making home buying a reality for most buyers who have been eagerly waiting for the rates to cut down. This would have also helped to accelerate the growth of the real estate industry. RBI has also been cautious ahead of an expected rate increase by the US Federal Reserve, which meets in mid-December. There is a possibility that interest rates in the US might eventually go up for the first time since the global economic crisis of 2008. Keeping this in mind, RBI has played a wait and watch game.”
Mr. Rajesh Prajapati, MD, Prajapati Constructions, “The real estate industry is disappointed with the announcement of Dr. Raghuram Rajan, RBI Governor on unchanged monetary policy. The industry was hoping for a marginal rate cut which was the need of the hour, even a small rate cut would have given a right signal about downward trend in interest rates and created an optimistic environment among buyers and encouraged the fence sitters to take a positive decision .At current level of property prices and interest rates, buyers are finding difficult to cope up with the pressures of home loan. This was the time when RBI should have taken a positive move and reduced the interest rate.”
Ms. Manju Yagnik, Vice Chairperson, Nahar Group, “The RBI Policy announcement today by Dr. Raghuram Rajan, RBI Governor keeping key policy rates unchanged at 6.75% was not as per the expectation of the real estate industry. The real estate sector was expecting a further rate cut at this stage which would have helped in improving market sentiments, bringing some respite to customers with home loans as well. Given the current property rates and stagnant market conditions a rate cut would have sent out a positive signal to home buyers and industry alike and would have given the much needed thrust to the realty sector.”
Mr. Rohit Poddar, Managing Director, Poddar Developers, “The sector of value housing was eagerly looking forward to this upcoming repo rate cut. Understanding the problem of inflation, this move was expected to benefit the sector of affordable housing thus ensuring easy purchase of the properties. The sheer unchanged news is upsetting but we hope that it is short-lived considering the current scenario of the real estate sector.”
Mr. Srinivasan Gopalan, CEO, Ozone Group, “This announcement is not going to affect the real estate sector very much as nothing has significantly changed this time. I welcome the decision that RBI has taken and hope to see some changes that will positively affect us in the next announcement.
Mr. Rahul Saraf, Managing Director, Forum Projects,”This time the RBI’s move is a bit unexpected, especially after the last monetary policy announcement where repo rate cut was 50 bps. This time due to the unchanged repo rate the market will be the same, lending some scope for the customer to invest a higher amount without a glitch as the rate was cut down largely last time. This time the policy will not have much of an effect on the real estate sector.”
Mr. Navin Makhija, Managing Director, Wadhwa Group, “Being a giant in the real estate sector, we were expecting a few changes in the policy. However, we respect this decision of the RBI. We are hopeful that this decision of keeping the repo rate unchanged will enhance the purchasing power of the buyer, especially the fence sitters. This will not only help developers initiate more projects at favorable capital but also create wider offerings benefiting home buyers.”
Mr. Manoj Paliwal, CFO, Omkar Realtors & Developers, “The apex bank RBI should ensure that housing loans become more affordable in order to bring the needed momentum in the real estate sector in India. It has brought down the rates understanding the market conditions when required. With no changes in Repo Rates and CRR this time which is tune with the present inflation and growth rate being under control, RBI will surely use its scissors to cut rates in the forthcoming reviews.”