How real estate industry leaders react to RBI’s monetary policy

      Comments Off on How real estate industry leaders react to RBI’s monetary policy




NEW DELHI:Today, maintaining status quo for the second time in a row, Reserve Bank of India (RBI) led by Governor Shaktikanta Das, has decided to keep benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance, implying more rate cuts in the future if the need arises to support the economy hit by the COVID-19 crisis.

The benchmark repurchase (repo) rate has been left unchanged at 4 per cent, Das said while announcing the decisions taken by the central bank’s Monetary Policy Committee (MPC).

Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.He said MPC voted for keeping interest rate unchanged and continued with its accommodative stance to support growth.

RBI had last revised its policy rate on May 22, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.The 25th meeting of the rate-setting MPC with three new external members — Ashima Goyal, Jayanth R Varma and Shashanka Bhide — began on October 7. This is the maiden meeting of the new members who were appointed just a day before the meeting for a term of four years.

It is to be noted that MPC meeting earlier slated between September 29 and October 1 was deferred for the first time as government failed to appoint external members before the scheduled date.

The government moved the interest rate setting role from the RBI Governor to the six-member MPC in 2016. Half of the panel, headed by the Governor, is made up of external independent members. MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2021, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.

Here are reactions from Real Estate Industries

Dr. Niranjan Hiranandani, ASSOCHAM president

It affirms our beliefs that the worst is over for the Indian economy. The RBI governor also confirmed that the contraction in economic growth witnessed in the April-June quarter with 23.9 percent is behind us. He also accepts that growth is likely to pick up in the second half of the fiscal and enter into the positive zone in the January-March quarter.

According to Dr. Hiranandani, the RBI’s decision to keep key rates unchanged was also much anticipated. “Further reduction in key interest rates was not a possibility at this juncture. The RBI’s decision to extend the scheme for co-lending to all NBFCs, HFC in respect of all eligible priority sector loans will allow greater operational flexibility to the lending institutions and is much welcomed.

Since February last year, the monetary policy committee has cut the repo rate by 250 basis points.

RBI’s decision to rationalise the risk weights on home loans and link them to Loan to value ratios only will give a boost to the real estate sector as well.Particularly this step would benefit borrowers of higher value loans. It would ensure that more credit is available to borrowers. This move is a much appreciated step recognising the role of the real estate sector in generating employment and economic activity.

The industry welcomes the Reserve Bank of India’s announcement to undertake further measures as necessary to assure market participants of access to liquidity and easy finance conditions. “The RBI has through its proactive measures taken honest efforts to provide access to easier credit to smaller businesses. However, we believe further steps would be needed to revive the economy.

Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com

The status quo on repo rate was expected as inflationary pressures made it difficult to cut rates further. Rationalising risk weightage on home loans and linking it to Loan to Value (LTV) ratio will effectively result in higher credit flow to the real estate sector, which is positive news for the sector. Also, the hike in credit limit for retail exposure by a single lending entity from Rs. 5 crore to Rs 7.5 crore is a welcome move that will immensely help both retail as well as small businesses.

Ashish Bhutani, MD & CEO, Bhutani Infra
This decision of the RBI to keep repo rate unchanged was taken due to the signs of revival that the MPC has observed recently. However, the bank should have taken into consideration the need for liquidity. The apex bank has also talked about improving liquidity in the market, which will have a direct bearing on the real estate too. Like the RBI we too are optimistic about the economic growth. Having said that we were hoping for announcements that can specifically talk about various sectors and how banks are going to help improve the growth. However, we are upbeat as the consumer sentiment is high, especially after they witnessed the brittle nature of other investment vehicles as against real estate.

Ankit Kansal, Founder & MD, 360 Realtors
The recent decision by RBI to keep the repo & reverse repo rate unchanged underpins the accommodative policy by the government alongside reining the inflation rate. This should have an overall positive impact on the recovering Indian Real Estate industry as an accommodative stance should plug-in the liquidity crunch in the market. Likewise, managing inflation will control the cost. At the same time, the RBI has announced a sharp GDP decline of 9.5% for FY 21, which is in line with what has been predicted by most of the major international & domestic rating agencies. Now all eyes would be on how the government plans to combat the economic slowdown and boost demand. A host of steps in the form of capital injection, refinancing of banking institutions, policy impetus, subsidies, and discounts are required to see a faster recovery.

Uddhav Poddar, MD, Bhumika Group & Founding Member, SCAI
“The real estate sector is badly affected due to the pandemic, and it needs support from the banks. One of the biggest issue with some of the realtors is the liquidity issue, and we hope RBI will address it as it has announced to take steps to ease liquidity. One of the announcements that is beneficial for the sector is that the new housing loans to be linked to LTV only. We hope that the buyers will take advantage of the situation and realize their dream of owning a home.”

Amit Modi, Director, ABA Corp & President (Elect) CREDAI Western UP
Even though the apex bank has kept the rates unchanged, but we still believe that there is room for financial institutions to cut down on their lending rates for their customers. During lockdown, the RBI reduced the repo rate which failed to bring cheer to the market, however now the stagnant rates today might have helped smooth the economy to some extent and the benefits of which are yet to be fully passed on to the customers.

Manoj Gaur, MD, Gaurs Group and Chairman, Affordable Housing Committee, CREDAI (National)
With inflation remaining above the targeted level, status quo on policy was expected. But it is indeed heartening to note that despite not much room available for lowering of rates, the apex has yet ensured some relief for the real estate sector. The lower of risk weightage on home loans and linking it to LTV only will ensure more credit to customers and thereby to the sector. Also, by announcing that accommodative policy stance, RBI has indicated that interest rate are unlikely to harden anytime soon, which again augurs well for the sector”.

Pradeep Aggarwal, Founder & Chairman – Signature Global Group & Chairman – ASSOCHAM National Council on Real Estate, Housing and Urban Development
It was an expected move by the RBI to keep the repo rate unchanged, and it is commendable that it is doing its part to ensure that the economy stays on the right path. Loan on LTV will be helpful for the real estate sector, and it will help them get more loan amount.

Abhishek Bansal, Executive Director, Pacific Group
It was an expected move, as we all understand that the repo rate is already low. The real estate market has started picking up as people are enjoying the low-interest rates and subdued pricing. The sector is also enjoying the fruits of the changed mindset of people towards owning a real estate asset, be it for living or earning extra income. The safety of real estate investment that came to the fore will gain steam during the festival season as fence-sitters too will come out in great numbers.

Deepak Kapoor, Director, Gulshan
RBI Governor Shaktikanta Das announced that the repo rate would remain unchanged at 4 percent and reverse repo rate at 3.35 percent. The apex bank has also announced that it is ready to take steps that will infuse liquidity to improve financial conditions. The market will eagerly wait for these steps as improvement in economic conditions of other industries will have a direct bearing on the real estate sector. The realty sector is already reaping rewards of the multiple steps taken by the government and low home loan interest rates extended by banks. RBI should have made some announcement to improve liquidity in the real estate sector, as many developers are facing the heat after COVID-19 led to a complete shutdown of operations. The optimism of RBI regarding economic growth is welcome, and we hope that the government pays attention to the requirements of the sector, which is the largest employer in the country.”

Achal Raina, COO, Raheja Developers
The extension of lending limit for retail exposure from Rs 5 crore to Rs 7.5 crore along with reduction of risk weightage on home loans and linking it with LTV ratio augurs well for the real estate sector.

Yash Miglani, MD, Migsun Group
The real estate sector is enjoying the fruits of high consumer confidence for the past few months, and it will attain newer heights in this festive season. We were expecting the repo rate to remain unchanged, and the decision of the RBI it will have no impact on the sector in the current scenario. In the latest announcement, the provision of housing loan to be linked with LTV is going to help the buyers, and hence the sector will see more sales.

Harvinder Singh Singh Sikka, MD, Sikka Group
We understand the reasons for keeping the repo rate unchanged. However, one favorable measure for the real estate is that the new housing loans will be linked on to loan to value (LTV). It will help the buyers get loans easily and realize their dream of buying a home. The buyers are already coming back to the sector and the coming festival season would be a lot better than the previous years.

Rajat Goel, JMD MRG World
RBI has kept the repo rate unchanged at 4% and reverse repo rate at 3.35%, during its recent announcement with prediction of GDP decline about 9.5% for FY 21, which is on similar lines with prediction from rating agencies.Affordable housing segment has seen good number of enquiries from end-users amid the uncertain market conditions which is a sign of positivity. Apart from this, RBI’s decision to take steps for infusing liquidity remain awaited, which will prominently affect the overall sentiment of real estate sector.

Amit Jain, Managing Director, Mahagun Group
The announcement was on the expected lines; the good thing is that the RBI looked optimistic about the economic growth, which is a good sign. Real estate sector has already started witnessing positive growth and is speedily recovering from the loss of lockdown. The momentum is picking up pace in this festival season as buyers are enjoying low home loan interest rates.

Vikas Bhasin, CMD, Saya Homes
We are optimistic that the measures announced by the RBI will help revive economic growth. Multiple announcements were made that will help other industries to go on a growth trajectory; this will have an indirect impact on real estate growth too as the sector is susceptible to economic changes. However, after the Unlock, the real estate is on a high note as people swarmed real estate sites to get hold of a property.

Raman Gupta, Director- Branding & Construction, GBP Group
In today’s announcement the apex bank has maintained the status quo by keeping the repo rate and reverse repo rate unchanged. It was an expected move to keep the economy on its path to revival after being hit by Covid-19. Over past few months people have realized the importance of owning a home and at this time when people are adjusting to the new normal, they have been seen exploring the stable investment options and real estate is topping the chart. The low interest rates and onset of festive season is certain is bring cheers to the real estate sector. Apart from keeping the repo rate at as low as 4 pc, RBI has also announced that it is ready to take steps that will infuse liquidity to improve financial conditions and we are looking forward to its positive impact on the recovering Indian Real Estate sector.

Kushagr Ansal, Director, Ansal Housing & President, CREDAI Haryana
The decision of the RBI to keep the new housing loans only to loan to value will encourage more buyers to come forward. The real estate market was looking good after the Unlock, and this particular step will make more fence-sitters to decide on buying a home. Apart from that, the good sign is that the apex bank is optimistic about economic growth. The measures that the RBI took in the last few months are showing a positive impact, and we hope that the latest decisions will help the economy recover faster.

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory

The status quo was on expected lines. The steep reduction in the rates over the past several months are slowly beginning to show impact on the ground. The move by RBI to link risks to loan to value will help banks shred the cautious lending approach. The move is bound to offer a much needed jump start to lending and liquidity cycle in the marketplace. The move is quite differentiated and going to be effective.

Dr. Nitesh Kumar, MD & CEO, Emami Realty Ltd.

Today RBI has once again considered the role of the Real Estate Sector in the economic growth of the country. With the new initiatives, Risk weights to be assigned to all home loans under as per loan-to-value on home loan make it safer and TLTRO would reduce cost of Borrowing for NBFCs this will boost the credit sentiments and bring much needed positivity in the sector. We can say it is good and expecting to give more stability to the economy.