RBI Focus On Economic Stability – Realty Industry Views

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Rajani Sinha, Chief Economist and National Director -Research, Knight Frank India “The RBI has taken reassuring steps to infuse additional liquidity into the housing sector through the interventions of increased financing to National Housing Bank and extension of priority sector tag for bank funding to NBFCs for housing loans. However, given the inflationary concerns in recent months, RBI has maintained the status quo on key policy rates. At a time when rising second wave of COVID infections and subsequent lockdowns are derailing economic momentum, RBI interventions will help maintain adequate liquidity as well as prevent hardening of yields in bond market. These measures will ensure economic stability as well as keep real estate sector stay afloat during such precarious times. Hopefully, benign retail inflation on account of better monsoon and easing of crude oil prices, coupled with accommodative stance would translate into lowering of policy rate in near future. Anurag Mathur, CEO, Savills India “The Reserve Bank of India has maintained an accommodative stance leaving the repo and reverse repo rate unchanged despite the marginal rise in inflation in recent months. The real estate market, especially the affordable housing segment, will continue to benefit from the record low-interest rates. In addition, the central bank’s decision to provide liquidity support of Rs 10,000 Cr to the National Housing Bank is a welcome move that will help improve lending in the affordable housing segment. Though the overall growth prospects remain encouraging with a GDP growth rate expectation of 10.5% in FY 22, the ongoing economic revival is subject to the magnitude of the second wave of infections and localised lockdowns.” Anshuman Magazine, Chairman and CEO, CBRE India, South- East Asia, Middle East and Africa “Maintaining a status quo for the fifth time, the RBI’s decision of keeping the repo rate unchanged at 4% is a welcome move which has been undertaken with the aim of ensuring economic revival, while ensuring that inflation remains within the target going forward. In addition to maintaining its accommodative policy stance, the Central Bank has also announced additional measures such as special liquidity facilities for all India financial institutions including INR 10,000 crore for the National Housing bank (NHB), timeline extensions of six months for banks on-lending to NBFC’s, constitution of a committee to comprehensively review the working of asset reconstruction companies (ARCs), extension of TLTRO On Tap scheme deadline by six months, amongst others. These measures are likely to assist the revival of the real estate sector while fast tracking economic recovery.” Dr. Niranjan Hiranandani, President, National Real Estate Development Council (NAREDCO) “The unchanged repo rate by the RBI MPC which signals to keep the borrowing momentum buoyant. Also, pegging the real GDP forecast at 10.5 percent reflects Indian economic recovery to be healthy, self-sustainable and resilient. An additional liquidity facility of Rs 500 billion to all India financial institutions like NABARD, NHB and SIDBI augurs well towards fuelling sustainable growth measures. On the issue of keeping markets ‘in sync’ with its policies, the RBI has done well to convince the market about its stance on growth and liquidity management. The guidelines on inflation and growth trajectory have mostly remained unchanged despite recent surge in input costs. Extending LTRO for six months translates into continued emphasis on maintaining balanced liquidity in the system by and introducing secondary market G-sec acquisition program 1.0 certainly clearly reflects the commitment to sustain growth momentum in the economy. Extension of Priority Sector lending for NBFC financing towards housing will augment the production outlay.”