By Accommodation Times News Services
Reserve Bank of India (RBI) issued its first quarter monetary policy for the financial year 2016-17, with a positive start for current year, RBI Governor Raghuram Rajan announced the policy with a rate cut of 25 basis points from 6.75 per cent to 6.5 per cent.
On the basis of an assessment of the current and evolving macroeconomic situation, the bank decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points and reduce the minimum daily maintenance of the cash reserve ratio (CRR) from 95 per cent of the requirement to 90 per cent with effect from the fortnight beginning April 16, 2016.
Though bank has kept the CRR unchanged at 4.0 per cent of net demand and time liabilities.
The move will be positive for the real estate industry and home buyers, as home loans will get cheaper with banks passing the benefits to the home buyers. Recently, country’s largest bank State Bank of India, reduced its lending rates by 10 bps, under the Marginal Cost of Funds based lending Rate (MCLR) regime. The move will may bring further reduction in rates.
Experts say, the decision will create a positive impact on market sentiments and economy.
The real estate industry is happy with the RBI’s decision and called it as a ‘Welcome Step’, Mr. Ashish Raheja, MD Raheja Universal, said, “The decision of rate cut is a welcome step. With this we believe will surely have a positive impact on the economy as well as across sectors at large. More specifically from the real estate sector perspective we believe that there will be some renewed interest from prospective home buyers who were hit recently by the ready reckoner rate hike across Maharashtra. While this move is positive it is left to be seen whether banks will pass on these benefits to their customers.”
“The repo rate cut by RBI is a step in the right direction. Although there were higher expectations of the cut, this is certainly good news for developers as well as buyers. It is also encouraging to hear that going forward, the central bank’s policies will remain accommodative. We hope the banks will pass on the benefit to the industry,” said, Kishore Bhatija, Managing Director, Real Estate Development, K Raheja Corp.
The housing finance industry is also pleased with the RBI’s announcement and is ready to pass on the benfits to the customers.
Mr Kapil Wadhawan, Chairman and Managing Director, DHFL, said, “The rate cut in first monetary policy for the current fiscal has started on a very positive note and sent a strong signal to see the system moving towards lower interest rate regime. The monetary policy has addressed the liquidity constrains of banks by assuring a near neutral liquidity deficit through open market operations. In the back drop of Marginal Cost System introduced for banks recently, RBI has shown its keenness to reduce the time lag and allow interest rate gains. We in the Home loan industry will be proactive in passing on the benefit of lower cost to the end borrowers and look forward to a very robust growth in the demand from retail home loan borrower.”
Mr. Deepak Joshi, President and Chief Business Officer, Religare Housing Development Finance Corporation Ltd, “As expected it’s a welcome move of RBI by cutting repo rate by 25 bps. This coupled with Marginal Cost of funds based Lending Rate – (MCLR) on which SBI has already taken a lead, will further reduce the lending rates in the market and increase credit off take. Also EMIs on retail consumer loans will further soften which will increase demand for auto and home loans.”
Whereas, some developers feel that RBI could have done some more to uplift the market, Mr. Rajesh Prajapati, Managing Director, Prajapati Constructions, commenting on the policy, said, “It would have been much more beneficial had the RBI reduced the repo rate by 50 bps, which in turn would have facilitated the banks to further reduce the rate of interest,” he said. Mr. Prajapati expressed the hope that hopes that the National housing Bank , PSU banks as well as Pvt banks will reciprocate by reducing its rate of interest to ensure lower EMIS on loans.”
Another leading developer from the city said, “We welcome the Reserve Bank of India (RBI)’s credit policy announcement of a repo rate cut by 25 basis points (25 bps or 0.25 per cent). The RBI Governor’s move is timed perfectly as the rate cut announcement has come just before GudiPadva, one of the most auspicious periods for buying a new home. Considering the overall market scenario, we were expecting at least a 50 basis points cut from the central bank this time. We hope that the banks and financial institutions will pass on the benefit of the rate cut to home-buyers. We are sure that the RBI announcement will have a positive impact on the market sentiment, especially when it comes to home-buyers”.