Dec 15 2015 | Economic Zone

RBI Monetary Policy

On December 1, 2015 the Fifth Bi-monthly RBI Monetary Policy Statement, 2015-16 was announced by Dr. Raghuram G. Rajan, Governor, Reserve Bank of India. With regard to the Monetary and Liquidity measures, on the basis of an assessment of the current and evolving macroeconomic situation, RBI has decided to: 1) Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.75 per cent. 2) Keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL). 3) Continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions. 4) Continue with daily variable rate repos and reverse repos to smooth liquidity. Consequently, the reverse repo rate under the LAF is kept unchanged at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 7.75 per cent.

Views of the industry captains from Real Estate sector on the RBI Monetary Policy announcement

Manoj Gaur, President CREDAI NCR & MD, Gaursons India Ltd
“Reduction in rates in the earlier policy helped to spur the economic growth along with leaving a positive impact on real estate market. The earlier rates were surprisingly slashed down to higher than expected 50 basis points bringing cheers to the realty sector. Unchanged rates this time however were along the expected lines but we are hopeful that RBI will give reduction in interest rates in next policy review. A cut in rates would have certainly reduced a descent amount of interest rates for loans thereby reducing the burden on common man’s pocket. This would have improved the market sentiments too and provided necessary impetus to buyer’s sentiments as well. However it is also good that RBI is open for policy accommodation based on positive data in coming future. On the part of banks, there are few who have refrained themselves from lowering the rates despite of RBI’s rate cut in earlier policy. Benefits rate cut should be passed down the hierarchy for the advantage of borrowers”.

Deepak Kapoor, President, CREDAI Western UP
“It was an expected move from the RBI because in the last policy review the rates were reduced by 50 bps. The RBI should compel all the banks to reduce the rates as only few banks have reduced the interest rates. We feel that after the reduction of 50 BPS the sector responded very well and today we see that the economy has grown at the rate of 7.4% this quarter. If all the banks pass on the benefit to customers we can see a revival in the real estate sector and continue to enjoy the growth rate at current pace”.

Gaurav Gupta, General Secretary, CREDAI Raj Nagar Extension
“RBI has held the interest rates steady which was an anticipated move. However a further reduction would have improved the real estate sentiments and prop up growth too. Real estate is a sector which is already facing issues of huge inventory and any cut in rates would have positively affected the real estate market further improving the demand by home buyers too. Maintaining the status quo on policy is also in line to restrain inflation expectations. We believe RBI would give rate cut in future as a measure to improve the condition of real estate sector which is one of the biggest contributors to country’s GDP”.

Om Chaudhry, Founder & CEO of FIRE Capital and Chairman & CEO of Astrum Value Homes
“As expected, RBI has kept the interest rates unchanged saying that the economy is showing good signs of improvements. RBI already gave a strong 50 BPS cut which left little room for further reduction in rates this time. Unchanged policy rates are also a sign that economic growth is picking up along with revival in investments. Although cut in interest rates would have benefitted the real estate sector but we are eyeing for better market conditions ahead. Reduction in policy rates at this moment would have had a noteworthy impact in boosting the realty sector and facilitating growth”.

Sanjay Rastogi, Director, Saviour Builders Pvt. Ltd
“Once inflation is under control we can expect RBI to give further reduction in interest rates. The move to keep policy rates unchanged is along the line to keep inflation under control and on the other hand it is also an indication that economy of our country is on track of improvement. During this fiscal 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. It’s important that borrowers also get the benefit so that they feel encouraged to invest in properties”.

Sanjeev Srivastva, MD, Assotech Ltd
“RBI’s move to maintain the status quo on policy came as an expected move after a big rate cut in previous bi-monthly policy. From long time, RBI has been taking steps to help the economy improve and real estate sector was also benefitted with such measures. Cut in rate cut in this policy review was hardly anticipated because throughout the fiscal, interest rates have either been reduced or kept stable. In order to refrain inflation from growing, rates have been kept unchanged, but of course, any amount of rate cut would have helped realty sector which is under the recovery mode”.

Prashant Tiwari, Chairman, Prateek Group
“Reduction in interest rates would have optimistically impacted the real estate sector and have enhanced the growth in realty sector. However the announcement came as a balance move by RBI as a decent amount of rate cuts have already been given in previous policies to stimulate growth. The lending banks need to take actions and pass on the reduced rates to loan borrowers. Keeping in mind the borrowers, lending banks should pass on the benefit at the earliest”.

Anil Kumar Tulsiani, CMD, Tulsiani Construction & Developers Pvt. Ltd
“Constant drop of repo rates by RBI since the beginning of this year had led the potential homebuyers to plan their homes purchase. In line with market expectation, now RBI has kept repo rates unchanged and it’s good that no further increase in rates have been done. This would thus allow more buyers to execute their plan of investing in properties. At least with unchanged rates they are sure that since rates will be constant; EMIs will not increase suddenly and remain the same”.

Suresh Garg Secretary CREDAI Western U.P. & CMD Nirala World
“No reduction in policy rates is not of any surprise as RBI has already slashed sufficiently many times since January this calendar year. Rate cuts are always watched upon so that the real estate sector could benefit resulting in direct benefit to the property seekers also. However, no change in the repo rate is also a positive sign that the economy is improving as per the government policies. Moreover, lending banks should reduce their rates accordingly which has not been done so far by many banks so that loan borrowers are encouraged to invest in realty market”.