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RBI cuts repo rate by 25 bps, realty players applaud move

Though Finance Minister Arun Jaitley’s Budget 2015-16 failed to enthuse the real estate industry, RBI Governor Raghuram Rajan on Wednesday gave it a surprise gift by cutting the key policy rate by 25 basis points to 7.5 per cent.

The Reserve Bank of Indiakept the cash reserve ratio (CRR) unchanged at 4 percent. “Disinflation is evolving along the path set out by the Reserve Bank in January 2014 and, in fact, at a faster pace than earlier envisaged,” the apex bank said in a statement. It also praised the fiscal consolidation measures announced in the Budget presented by the Government.

This is second repo rate cut by the RBI in 2015. Earlier in January, a 25 basis repo rate cut was announced.

This is the first time that the RBI has announced a monetary policy action ahead of markets opening. After the RBI announcement on Wednesday stock markets cheered the move, the real estate stocks were among the major gainers on the bourses. Realty indices jumped more than 1.5 per cent with NBCC, IB Real Estate, Mahindra Lifespaces and DLF among the top gainers.

Prominent realty players contacted by Realty & More were unanimous in applauding Rajan’s post-Budget move.


Mr.Manoj-Gaur,MD,-Gaursons-India-Ltd.....Manoj Gaur, MD, Gaursons India & President, Credai Western UP, said, “It is a surprise gift by the RBI to the home loan-seekers in India. Now we are waiting for the banks to cut down a bit on home loan interest rates so that buyers can get lower EMIs. This step — the second in three months — reflects that the government is gradually working towards providing housing for all”.

David Walker-20090206David Walker, Managing Director, SARE Homes, called it a “positive sign” for the industry. “We expect financial institutions will pass on this reduction to customers and this in turn will give buyers confidence that with lower EMIs property purchase will be more affordable,” he said.

Mr. Sanjeev Varshney, Managing Director, Prop Leverage_aAccording to SanjeevVarshney, MD, Prop Leverage: “The cut in repo rate will definitely help the real estate sector gain some steam. People have been waiting for the house prices to come or for the EMIs to rationalise, and this cut in repo rate will definitely mean a good drop in EMIs.”

Mr. Mohit Goel, CEO, Omaxe LimitedMohitGoel, CEO, Omaxe Ltd, said, “On the back of Budget, the cut in rep rate by 25 bps to 7.5 per cent is a quick move by the Reserve Bank of India to make every attempt to lower the cost of financing and spur demand in the economy.” With two cuts in a span of a month a half, the apex bank, he said, had given the right signals and it’s time banks reciprocated.

Brotin BanerjeeBrotin Banerjee, MD and CEO, Tata Housing, dubbed the announcement by RBIa welcome move,saying it can contribute positively to the growth of the real estate sector. Banerjee said, “The rate cuts announced in January had not translated into action by the banks, but a cumulative cut now amounting to 0.5 per cent will enhance lending powers of the banks. It will permit banks to cut down interest rates on home loans enabling new consumers to take advantage of the low interest rates in the real estate market.”

“Something is better than nothing,” was the quick reaction of Ajay Kumar, CMD Ace Group. He told Realty & More, “The reduction of 25 bps in the repo rate announced by RBI today has given a feeling of relief partially as post the recent Union Budget 2015-16 the real estate had expressed its displeasure in mass and also developed the emotion that the future of real estate sector is going to be bleak for having not announced any policy favouring this sector.”

Dhirender GabaDhirender Gaba, MD of Fairwealth Housing, said, “The real estate sector had formed this opinion that the Government has put us in isolation by not announcing any major relief in the Union Budget 2015-16. We heartily welcome this announcement made by RBI and look forward to the announcements of such periodic reliefs in future to bail out the real estate industry from the present crisis.”

P-Sahel-Vice-Chairman-Lotus-Greens1P Sahel, Vice Chairman, Lotus Greens Developers, said,“The sudden decision by the Reserve Bank of India to slash the repo rate by 25 bps points to 7.5% from existing 7.75% post the Union Budget came as a pleasant surprise. We believe that the financial institutions will now be able to reduce home loan rates which will encourage prospective home buyers in speeding up the buying decisions. At the time when Government is auguring a double digit GDP growth, this development is poised to act as a catalyst for creating positive impact on the overall realty sector.”

Mr. Arjunpreet Singh Sahni.Executive Director.Solitairian GroupArjunpreet Singh Sahni, Executive Director, Solitairian Group, said,“The recent budget has largely turned out as a non-event for the home buyers, as it did not have any major announcements to boost their sentiments, but this immediate 25 bps repo rate cut by the RBI is expected to provide them quick relief in the form of reduced EMIs on their home loans, provided the banks also take quick action in the wake of the second repo rate cut in less than two months, and pass on some benefits to the home buyers too by reducing the home loan interest rates on urgent basis. If the banks work on the expected lines, this step taken by the RBI will definitely turn out boosting the overall sentiments in the real estate market.”

Aman-AgarwalAman Agarwal, Director, KV Developers, said ,“The move has come as a breather for the real estate sector which did not get big bang announcements in the Union Budget. Rate cut will eventually act as a catalyst for home buyers with banks expected to cut lending rates significantly. We can expect more shorter sales- cycle going forward and improved liquidity for developers as well. While this is a significant step by the Apex bank, the industry is still awaiting infrastructure status which would eventually ease out liquidity crunch for the sector.”

Manish Agarwal-MD-Satya Group & Secretary - CREDAI NCR (1)Manish Agarwal, Managing Director, Satya Group & Secretary, CREDAI NCR said, “The rate cut signifies that the government has been able to create conducive environment for low interest rate regime. A cut of 25 basis point may not look to be significant from the point of view of current health of economy and consumer sentiments, but it will bring great respite for the working class who were reeling under tremendous financial pressure due to high EMIs. The onus now lies with banks to pass on benefit to the borrower. With Government fixing RBI’s responsibility to control inflation, the economy is heading towards a new era which will reap tremendous benefits for all stake holders. Reduction in the interest rate will leapfrog the economy with benefits to all sectors. The real estate sector would also benefit if the rate is cut for retail loans.”