New Delhi: The Reserve Bank OF India today cut the Repo Rate by 35 basis points, its fourth consecutive cut this year. So far, the RBI has lowered the Repo Rate by a total of 110 basis points this year, enabling commercial banks to cut down their lending rates.
The Repo Rate cut has largely been welcomed by real estate developers across the country. Here is a look at how they reacted:
Ashish R. Puravankara, MD, Puravankara Ltd
It is very encouraging to hear the RBI Governor’s advisory to banks to pass on the benefit of the rate cuts announced in June, down to the industries. In this background of a further cut of 35bps, we hope banks and housing finance institution will and pass on the benefits. For the real estate sector, a reduction in the cost of funds means that we can pass that on to our customers directly which will be encouraging for the sector at large.
Niranjan Hiranandani, President NAREDCO
The fourth straight cut in the benchmark repo rate is a welcome step which will make borrowings cheaper and would help boost in demand in several sectors like real estate and auto which has been sagging since last several quarters. It would also help in bringing about some balance between growth and inflation.
We believe that the credit policy announcement is an extension to what was already initiated by the central government in the Union Budget 2019-20 for giving fiscal stimulus to NBFCs.
Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani
A wave of next gen reforms has set the stage for years of high growth for the real estate sector. Today’s rate cut of 35 bps is yet another initiative that is propelling real estate sector on a new growth trajectory. It has been observed that, despite the reduction in repo rates by the RBI in the previous reviews, it did not have any significant impact on lending rates. Going forward, it is imperative for banks to reduce the lending rates and ensure that the home loan borrowers reap the benefits of this move. Real estate being a highly cost sensitive sector, demand will only pick up if the cut is substantial to result in significant cost savings.
Bijay Agarwal, MD, Salarpuria Sattva Group
This move by RBI to cut interest rate by 35 bps will be more comforting for the market than just a rate cut. When the banks are constrained with their cost of borrowing, they will be able to lower their respective marginal cost of funds based lending rate (MCLR), which directly impacts loans. In real estate, reduction in the cost of funds means the same can be passed on to customers directly. This will encourage customers to buy properties due to reduced interest on home loans, hence increasing the purchasing power of the common man.
Prateek Mittal, Executive Director, Sushma Group
The reduction of 35 basis points in third bimonthly RBI monetary policy by the central bank will provide the required impetus to the economy of the country. This move along with infusing liquidity in the banking system will also result in reduced burden on banks’ resources which will further bring down interest rates on home loans providing the much needed boost to the real estate industry.
It will also provide a liquidity push to the developers as well, boosting the growth of the sector.
Uddhav Poddar, MD, Bhumika Group
Reduction in repo rate by another 35 basis points will bring down construction finance costs and ease out home loan rates, giving yet another boost to the real estate sector. Apart from this, RBI has also enhanced exposure limit of banks to a single NBFCs, which in turn would boost credit to real estate sector and tackle the liquidity crunch. The step was necessary and the Govt and RBI have taken timely steps to ease the liquidity situation to some extent. We expect some more measures in the coming days.
LC Mittal, Director, Motia Group
The fourth consecutive repo rate cut in the bimonthly RBI monetary policy is a commendable and much needed step taken by the central bank to curb the liquidity situation. With a reduction of 35 bps, the repo rate now stands at 5.4 per cent which will further push the housing segment after all the initiatives taken by the government to boost the segment.
We expect the banks to transmit the rate cuts to the borrowers to get the desired results of this constructive move.
Ashok Mohanani, Chairman, EKTA World
For the fourth time in a row, the RBI cuts the repo rate, this time by 35 basis points. The RBI has pumped lot of liquidity into the banking system which should make a clear pledge to keep the banking system glow with liquidity. While the cost of capital is headed lower, we trust future commencement will be in baby steps, motivated by lowering of inflation expectations, a global recession notwithstanding. It will definitely spur growth for the real estate sector specifically. There have been many meaningful interventions by the government and regulator which has provided a positive boost to the home buying sentiment among the potential homebuyers.