The Reserve Bank of India in its first bi-monthly policy review for the financial year 2018 – 19, has decided to maintain the status quo by keeping the key rates unchanged. This monetary policy review which is the second post the Union Budget 2018 – 19, RBI Governor Dr. Urjit Patel has decided to continue their balanced and vigilant approach towards interest rates, Statuary liquidity ratio (SLR) and Cash reserve ratio (CRR). This means that the RePo rate stands at 6 percent, Reverse RePo at 5.75 percent, Marginal Standing Facility (MSF) at 6.25 percent, CRR at 4 percent and SLR at 20 percent. This has been done keeping in view 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.
Industry Reacts:
Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz
The decision of RBI to keep the rates unchanged is a clear indication that the apex bank wants to maintain its vigilant approach in the upcoming two months as well. A sufficient cushion needs to be kept for the economy with the start of a fresh financial year and the changes which will happen with REITs and InvITs expected to be operational soon.
Manoj Gaur, Vice President CREDAI-National & MD, Gaurs Group
There is no rate cut in the latest monetary policy by RBI however, a parallel cut in repo rate and CRR would have brought a win-win situation for the banks. This would have allowed them to reduce the interest rates and keep the surplus funds simultaneously, further enhancing their lending capacities. The start of the financial year in such a way could have in that case become a big sentiment driver for the entire economy.
Gaurav Gupta, General Secretary, CREDAI Ghaziabad & Director, SG Estates
The reduction in rates would have ultimately been advantageous to the customers for the reason that if banks have reduced rates, the same will apply to the end-borrowers too and real estate market will have a pool of demand to deal with. A rate cut of 25 bps could have helped ease the pressure off the market which has been balancing itself for over 6 months now. However, with no change offered in this monetary policy review, we expect the market to run with only a static demand in the short run.
Abhishek Bansal, Executive Director, Pacific Group
In case of an economy dominated by low interest rates and having abundance of cash flow, the risk of inflation is greater. Hence, the decision of the RBI to not reduce the rates until it has been fully convinced about the inflation control is very justified. But as we have just began with the financial year, a rate cut today would have allowed potential buyers to plan better for their investments in the property market for the current financial year.
Vikas Bhasin, CMD, Saya Group
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. Prior to this, the last reduction was a 25 basis point cut in the key rates in the month of August 2017, the benefits of which are yet to be fully passed on to the customers. Also, as the Union Budget failed to bring cheer to the market, reduced rates today might have helped sooth the economy to some extent.
Dhiraj Jain, Director, Mahagun Group
Looking at the market dynamics, we were projecting the RBI to maintain the status quo. Any reduction in lending rate allows the sentiments in real estate to improve as the net cost on the buyer for the housing unit gets decreased but with the market inflation not coming below the medium – term target and potential trade wars among more advanced economies of the world, the apex bank would have been compelled to maintain the status quo.
