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Let bankers pass on RBI rate cut benefit

The Reserve Bank has cut the repo rate by 25 basis points. Will it have any impact on the housing sector?

Let’s ask the experts:

Anuj Puri, Chairman - ANAROCK Property Consultants said: As for the housing sector, this rate cut may send only send out positive notional signals - its real gain can be realised only if banks pass on the benefits to actual homebuyer borrowers. The apex bank will need to ensure that this actually happens at the ground level since there has been little evidence of such transmissions in the recent past.

Welcoming the RBI decision, Anshuman

Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE, said: This was expected, given the backdrop of low inflation and rising growth concerns in the economy. The rate cut coupled with the budget stimulus for the economy, and the real estate sector in particular, will impact consumer sentiments positively.”

Jayant Mehrotra, Chief Financial Officer, Lodha Group: RBI’s decision on rate cut by 25 bps, which is also for the third time in a row is a welcome move and home buyers should expect cheaper loans from banks. However, the concern around the actual transmission of rate cuts to effective lending rates persists. Effective transmission and improvement in the liquidity conditions would provide a boost to the real estate market.

Samyak Jain, Director, Siddha Group: The RBI’s decision to reduce the repo rate has paved way for the improvement of the Indian Economy. The third consecutive rate cut this year is expected to provide the desired impetus to the residential segment of the realty sector through low-cost home loans. We hope that banks pass on the benefit to homebuyers and also expect this initiative to boost credit growth and revive the inactive nature of the economy.’’

Tushad Dubash, Director, Duville Estates: The expectation was a higher repo rate cut. This would have provided a greater impetus to individual consumer home loan traction. Never-the-less this 25 bps cut should provide an incentive for home buyers to avail of better home loan rates. One is hopeful that there would further consecutive rate cuts and that would certainly help actualize the need for a home.

The economy needs the real estate industry to perform better as there are a whole set of allied industries such as cement, steel, aluminium and sanitaryware whose top lines would register a shift upwards. This would help accelerate the overall growth in the economy which has slowed for the fourth straight quarter. Real Estate construction also provides higher unskilled employment opportunities.

Towards retailisation:

Shyam Srinivasan, Managing Director & CEO, Federal Bank: The desire to stimulate the themes of digital and retail-ization of India is evidenced in the policy, through a rate cut, a change in stance from calibrated tightening, two policies ago to ‘accommodative’, waiver of charges for RBI-operated Payment Systems, Retail participation in SDL (state development loans) market as well as the announcement on Foreign Exchange Trading Platform for retail participants.

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