Achhay Interest Din for some more time

Eye on inflation - RBI

Achhay Interest Din for some more time

RBI policy to ensure status quo

RBI’s MPC also decided to continue with the accommodative stance as long as necessary to revive and sustain growth

MUMBAI, Feb 10 (The COINNECT) - The Monetary Policy Committee of the Reserve Bank of India decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4 per cent.

The reverse repo rate under the LAF remains unchanged at 3.35 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 4.25 per cent.

The MPC also decided to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward, RBI said.

These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth, it said.

The business and industry in general have hailed the decision.

BizNewsConnect presents a snapshot of the reactions.

Sandeep Runwal – president -NAREDCO Maharashtra and Managing Director, Runwal Group, felt that the RBI has continued to maintain the status quo on key policy rates in view of inflationary concerns. It has taken a proactive stance to ensure liquidity. The MPC’s 'accommodative' stance will provide the required fuel for the growth of the economy.

“As the industry is recovering from the impact of the 3rd wave of Covid, it is important to support growth and spending,” Runwal said. By keeping the interest rates unchanged, RBI has clearly indicated that it is looking for sustainable growth and boosting consumer sentiments, he said.

Anirban Chakraborty, MD & CEO, Tourism Finance Corp India Ltd, said RBI continues to surprise markets, pleasantly this time, by continuing with its accommodative stance.

The general market expectation was that of, some tinkering with the Reverse Repo rate. This decision of status-quo, no doubt, shall provide relief to the economy, especially affected sectors like hospitality, retail, real estate, auto, etc., for some more time, he said.

Further, allocation of Rs. 2,400 crore to the Ministry of Tourism in the Union Budget this year (18.42% higher than the previous year), coupled with low interest rate regime, shall greatly benefit the hospitality sector, Chakraborty said.

However, with crude in $90 per barrel range, one needs to be watchful of the inflation numbers, he cautioned and forecast sharper adjustments in the future, coupled with increasing of rates by the US Fed could lead to flight of capital and put pressure on Rupee. However, for the time being, dealing room mood is lifted for sure.

Ramesh Nair, CEO, India & Managing Director, Market Development, Asia at Colliers, said RBI’s This support is needed for sustained recovery in economic growth. At a time, when the market was expecting a hike in reverse repo rate and change in stance of the Central Bank to ‘neutral’ to be a precursor to future rate hikes, the ‘status quo’ of the Bank comes as a breather for the real estate sector, he said. 

In the absence of the specific demand-side interventions from the Budget 2022-23, prospective homebuyers can continue to benefit from lower home loan interest rates which are here to stay for now, Nair said.

Amit Goyal, CEO, India Sotheby’s International Realty, said RBI decision is good news for home buyers. The historically low home loan interest rates will continue for some more time and keep the mood buoyant. The other welcome news is that the business outlook remains optimistic and real GDP is projected at 7.8% for next fiscal by the governor, Goyal said.

Suren Goyal, Partner, RPS Group, the RBI policy augurs well for the real estate sector. “It is likely to boost demand and we hope the accommodative stance will continue for the next year or so,” he said

Welcoming the RBI’s announcement, R K Arora, Chairman of Supertech Ltd said the unchanged repo rates will help in maintaining the low interest rate regime and this works well for home buyers planning to buy homes with help of home loans.

 Gautam Thacker, President, NAREDCO - Neral-Karjat Unit too welcomed the move that is aimed at further strengthening the economy post covid it is targeted to keep the buying sentiments high.

Haresh Mehta, CMD - Rohan Lifescapes, said the policy is very thoughtful and motivating. The decision on holding on to the existing rates will help the real estate sector to gain more demand.

“The fact that the rates will remain unchanged is definitely falling in the favour of all the home loan borrowers as the affordability quotient will continue to be there in the current time of uncertainty. With the continuation of the same old rates, it is expected that consumer sentiments will be highly optimistic when it comes to buying a home. The consumption in the residential space is expected to expedite with this move of the RBI,” Mehta said.

HP Singh, Chairman & Managing Director, Satin Creditcare Network Limited, said the RBI Governor Shaktikanta Das’ forecast of growth coming in at 7.8% in FY23 is another reason for a bullish view going forward. This, coming soon after the boost to the fintech industry in Budget 2022 – with an increased focus on financial inclusion by enhancing the banking and infrastructure framework in the country, among other aspects, gives us reason for increased optimism, he said.

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory, said the RBI decision was on expected lines. This was needed not only because of the increased government borrowing but also to accelerate the current economic growth trajectory. This is good news for the housing market as historically a low interest-rate regime has always pushed the real estate market in India, he said.

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI MCHI, said the low-interest rates have been a crucial factor in the revival of the demand in the real estate sector. In the past few months, the buyers have made the most of the rock-bottom interest rates on home loans along with offers from good developers. T

“This might also be the last opportunity for the homebuyers to purchase property with low-interest rates before RBI decides to hike it in any of their future bi-monthly policies. Also, to keep the prices down on the account of rise in raw materials prices will be a huge challenge in front of the developers," he said.

Shraddha Kedia-Agarwal, Director, Transcon Developers, felt that the Reserve Bank’s decision will help to sustain liquidity for some more time which will augur well for the real estate sector and the overall economy. The low-interest rates for the last few months have already given a boost to the real estate sector upticking the demand in the last few quarters and enhancing the confidence of the homebuyers. The decision will therefore help to keep up the momentum going forward as well, she added.

Bhushan Nemlekar, Director, Sumit Woods Limited, said the Government has always taken affirmative measures to revive the economy and alleviate the Covid-19 impact with sustained fiscal and monetary support. “The prevailing low home loan rates are already enticing for homebuyers which have immensely benefited the real estate sector,” he said. “This decision will create further demand and sustain the growth momentum in upcoming months," Nemlekar said.

Jitesh Lalwani, President, Home Sync Real Estate Advisory Services, welcomed the RBI policy and said real estate sector has been severely hit during the pandemic and “the recent budget announcements and the RBI's decision today will boost the sector to cope with markets’ uncertainties.''

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