Developers’ take on RBI second bi-monthly monetary policy 2016-17
Reserve Bank of India (RBI) kept its policy interest rate unchanged at a five-year low of 6.50 per cent, while signaling the prospect of another cut later this year. Let’s go through the developer’s reactions: Neeraj Gulati, Managing Director, Assotech Realty “RBI move to maintain status quo on key policy rates was expected. It is evident that inflation is trending upwards. Coupled with this, capital investment remains sluggish and supply constraints continue to act as a dampener. All this has left very little room for the RBI to manoeuvre. A cut in rates would have certainly improved the market sentiments and provided necessary impetus to buyer's sentiments;however in the longer run we definitely foresee rate cuts that will boost the housing demand in India” Manju Yagnik, Vice Chairperson, Nahar Group “Keeping rates unchanged will help control inflation which presently is at 5% with an upward bias. The last RBI bi-monthly announcement had reduced interest rate which were not passed on to customers by the banks. We hope that now banks pass on the benefits to the customers by lowering interest rates which will result in spur in the property sales and inject fresh capital into the market.” Vineet Relia, Managing Director of SARE Homes “RBI decision to keep the repo rate unchanged at 6.5% is disappointing, though not unexpected. Since retail inflation is expected to rise due to the rally in crude oil and other commodities prices and implementation of the 7th Pay Commission recommendations, it is clear the RBI is focused on lowering retail inflation. Nonetheless, a rate cut could have improved liquidity and created renewed interest in property purchase. We are hopeful,a rate cut may be in the offing in the latter half of 2016.” Ashwin Sheth, CMD, Sheth Corp Ltd. “Playing it safe, RBI has been more cautious about the monsoon and its impact on inflation. Although, a rate cut at this stage 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. The Government has taken the lead in trying to implement policies that will boost growth of the real estate sector. In the same vein, RBI too should have looked at the real estate sector with new optimism.” Aman Agarwal, Director, KV Developers & Governing Council Member NAREDCO “Real estate sector was expecting a rate cut which could very well help in bridging the demand, supply gap and brings liquidity to the market. However, the decision to keep repo rate unchanged is indication of RBI’s determination to control over inflation and achieve sustainable growth of the economy. We hope the next RBI announcement will provide much needed boost and encouragement to home buyers, for which they are waiting long.” Pratik K. Mehta, MD, Unishire “RBI has done what is best for country’s economic growth. Any reduction in rates will always be wanted especially for realty sector but what is more important is passing on of the rate cuts to the home buyers. Benefits of past rate cuts have not been completely passed on to the home-buyers yet, if banks decide to pass them, that itself can be a big boost to the sector. Our sector is witnessing a slow down on sales, prices of real estate have bottomed down in key end user driven markets, thus, interest rates play a key role in pushing the fence-sitters to take decision. Even RBI has maintained that transmission of interest rates is critical for growth. We welcome RBI’s move and hope that now banks do their part to help in uplifting the realty market sentiments.” Rajesh Prajapati, MD, Prajapati Constructions “The real estate industry was hoping for a rate cut in the present bi-monthly policy meet. But the RBI Governor Dr. Raghuam Rajan decided to push the pause button and kept the interest rates unchanged which is not a welcome sign for prospective home buyers.” Kishore Bhatija, Managing Director - Real Estate Development, K Raheja Corp “The second bi-monthly policy announcement while maintains status quo on the rates, is accommodative in approach. We continue to be optimistic as the banks still have room to pass on the benefits of the previous rate cuts undertaken. We believe the steps taken by the governor are on the right path to address the economy where the inflation is likely to witness an upward bias.” Manish Agarwal, MD, Satya Group “For couple of years the real estate sector is in low phase and high interest rates have been one of the reasons due to which buyers are away from the market. We expect a good rate cut in the next review with the expectation of a good monsoon and the forthcoming festive season.” Arjunpreet Singh Sahni, ED, Solitairian “Although it was expected because RBI had reduced the rate in one of the previous quarter however a cut could have given good impetus to the sluggish sector. The RBI is also reviewing the implementation of marginal cost lending rate framework by banks which was introduced to ensure that the changes in interest rate policy is effectively transmitted to the bank customers..” Pankaj Kumar Jain, Director, KW Group “Lower interest rates are important for sector to flourish. Although the RBI has periodically reduced the rates but banks are still charging high interest rates for home loans. RBI has to push the banks to pass on the benefits to the customer.” Deepak Kapoor, President, CREDAI Western UP “It was an expected move from RBI to hold back the interest rates considering inflation and crude oil prices. Slashing down the policy rates at this moment would have had a remarkable impact in boosting the realty sector and facilitating growth. Moreover, RBI should compel banks to pass on the benefit of reduced rates to borrowers as only few banks have reduced the interest rates.” Prashant Tiwari, Chairman, Prateek Group “RBI’s announcement to keep the interest rates unchanged signals that our economy is on the right track of growth. Maintaining the status quo on policy is also in line to restrain inflation expectations. The announcement seems to be a balanced move by RBI as a decent amount of rate cuts have already been given in previous policies to stimulate growth. Now, it’s the lending banks that need to take actions and pass on the reduced rates to loan borrowers.” Vaibhav Jain, Chairman, Rise Group “Led by our expectations RBI has refrained itself from cutting the policy rates in this monetary review. But a rate cut of even as small as 25 bps would have triggered positive sentiments in realty market as this small cut also means a lot to borrowers and provides huge savings in the long run.” Om Chaudhry, Founder & CEO of FIRE Capital and Chairman & CEO of Astrum Value Homes “RBI keeping the interest rates unchanged is not of any surprise as these expectations rose after (CPI) consumer price inflation moved north to a more than expected 5.39 percent due to higher food prices. The move also came to accelerate economic growth and to stick to the fiscal deficit targets of the government. But then rate cuts are also important to lower the cost of funds and spur investments in a sector like real estate which is one of the biggest contributors in India’s GDP growth.” Sanjay Rastogi, Director, Saviour Builders Pvt. Ltd “The move to keep policy rates untouched came as per our anticipations with growing concerns about risks of inflation. On the positive side it is also an indication that economy of our country is on track of improvement. In the past year, RBI has given good amount of rate cuts to spur economic growth but lending banks have still not passed the reduction of interest rates to borrowers.” Atul Banshal, President – Finance & Accounts, M3M Group “With Government’s determination to streamline India’s overall economy, RBI should have complimented these steps by softening interest rates. While Indian economy is showing some encouraging signs, it was the opportune moment to offer moves that would have ascertain steady momentum.” - Rajesh K Gouri, Vice President, Homestead “We welcome the decision as it seems that RBI wants to create a conducive environment for the economic growth and anticipate for a positive outcome. However a reduction in policy rates at this stage would have been highly favorable for real estate industry which is reeling under low-demand pressure since long.”
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