The Industry Reactions on the RBI Monetary Policy


Piyush Bothra, CFO, Square Yards: The RBI’s India’s decision to maintain the repo rate status quo is a positive decision and will make sure that home loan interest rates will not harden soon in the coming days. The low-interest rates have started impacting the property markets in a positive way. Maintaining low home loan rates was critical for a sustainable recovery in the real estate sector. After the announcement of tax holiday for the primary affordable and rental housing segments in the recent budget, this news will enhance confidence in homebuyers and nudge them towards making good purchase decisions

Ramesh Nair, real estate industry veteran and former CEO of JLL India: The expectation from the real estate industry was deeper cuts in policy rates.
Given that RBI has not cut rates, they should now try and ensure that the previously announced rate cuts are fully transmitted to end-users and developers and also focus on increasing the quantum of overall credit available for the real estate sector.

Dr. Harsh Kumar Bhanwala, Executive Chairman, Capital India Finance Limited (CIFL): “With this accommodative stance, the RBI is expecting normalization of sectors as the CRR will further open up space for a variety of market operations and make lending easier. The RBI extending Targeted Long Term Repo Operations (TLTRO) to NBFCs will further enhance credit flow and potential for the affordable housing sector, SMEs, infrastructure projects, etc.  Since the resident individuals can now make remittances to IFSCs for NRIs, it will increase the flow of remittances from foreign countries.”  

Rohit Poddar, MD, Poddar Housing and Development Ltd and Joint Secretary, NAREDCO Maharashtra on RBI’s MPC announcement: “RBI has maintained its accommodative stance not only for rates but also for taking the liquidity infusion-related measures. H2 of 2020 has been one of the best periods for real estate considering the growth that has been achieved, the decision to keep the rates unchanged will further help in continuing the momentum.

The GDP growth is expected at 10.5% which showcases that India is advancing towards a more normalized environment. Despite a larger than anticipated deflation in vegetable prices in December, the increase in commodity prices globally is likely to keep the core inflation elevated. The rising commodity prices (like crude oil) globally are likely to influence inflation to move in a high trajectory. Incentivizing new MSME loans would help banks in expanding their lending cap for the sector. The policymakers in India are taking decisions which are in the best interest of the country’s economic revival.”

Anuj Puri, Chairman – ANAROCK Property Consultants: Monetary Policy Keeps Rates Unchanged.

As expected, the repo rate and the reverse repo rates remained unchanged while maintaining an accommodative stance. With consumer inflation still trending at the upper end of the apex bank’s band, and the policy repo rate also being substantially reduced by 115 basis points since February 2020, RBI kept the rates on hold, with an eye on how the inflation and the economic recovery pans out in the coming months. Advance estimates indicate that the Indian economy may contract as much as 7.7% in FY2020-21 due to the pandemic.

In such a scenario, one would usually expect RBI to cut repo rates in order to boost consumption. Certainly, the real estate industry always aspires for reduced interest rates. Housing demand is reviving, and this demand needs to be fostered. However, the RBI’s current stance is absolutely justified, given the unique circumstances.  We are certain that rates will be adjusted favorably once the pandemic exigencies ease.

Prabhat Chaturvedi, CEO, Netafim Agricultural Financing Agency: “The Monetary Policy Committee’s sustained accommodative stance is positive from the perspective that RBI is giving utmost priority to growth. Today’s announcements by RBI to provide funds from banks under the TLTRO on tap scheme to NBFCs is a step that would ease liquidity challenges of small and mid-sized NBFCs and incentivize bank credit flows for them. Allowing banks to permit NBFCs to access these funds for the targeted lending to the desired segments such as the agriculture value chain and MSME would significantly facilitate meeting the objective of inclusive growth. These NBFCs borrow only for on-lending and hence can act as a force-multiplier and expand the credit reach to various sectors. The relief would improve cash flow and prevent further downslide from hereon. It indicates the willingness of the policymakers to ensure liquidity in the system.”

Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory: “After a budget that had limited announcements for real estate, the sector was hoping against hope for a further reduction in the repo rates. The reduction would have helped spurred growth in demand for real estate assets, which has been severely hit as a result of the pandemic and subsequent lockdowns. Currently, apart from the reduction in stamp duty charges in some parts of the country, the all-time low housing loan rates have given the much-required filip to sales activity in the last quarter. The reduced repo has the potential to boost consumption in the economy and help reduce dependence on government spending.”

Ram Raheja, Director at S Raheja Realty: “In line with expectations, the RBI has kept the repo rate unchanged at 4%, while continuing the basic accommodative stance of the policy in response to the objective of the revival of growth. It’s a wise step taken to ensure 2021 to be a better year and to be a set tone for the new economic era. The home loan rates will continue to be at a multi-year row, hence aiding homebuyers. The MSF and bank rates are unchanged at 4.25% and this will help in restructuring many companies which are still in distress due to the lockdown and boosting the sector at large.”

Ankush Kaul, President (Sales & Marketing) – Ambience Group: “The latest MPC review comes on expected lines. As expected, the repo rate and the reverse repo rates remained unchanged while maintaining an accommodative stance. But the market still has a number of concerns, particularly of, high inflation and overall economic distress. With the government planning a robust economic recovery, the real estate market is dependent on a lowered interest rate scenario. Thankfully, the demand for housing is already on the rise. This should compensate for the latest review. Going forward, the market is bound to revive on the basis of current positive consumer sentiment.”

Ashok Mohanani, President – NAREDCO Maharashtra: “The economic growth needs to be supported through the monetary policy and this is the foremost reason that the RBI has continued its accommodative stance. It has focused on balancing liquidity in the financial system while keeping inflation within its target. The interest rates will continue to be at a record low, however, the banks should pass on the benefits to the customers which will boost real estate demand. Like the last quarter, we expect the demand to be robust in the Mumbai MMR region in this quarter. The state government’s recent announcement of reduction on premiums for developers along with stamp duty reduction for buyers will have a cascading impact on project sales, which will provide an immediate boost to the ailing sector. In the recently concluded Union Budget too, the Central Government has focused and put a step in the right direction to revive the economy after the repercussion of the Covid-19 impact. It has sustained its thrust on affordable housing which will further help achieve the Prime Minister’s vision of Housing for All. The real estate sector in India is expected to reach US$ 1 trillion by 2030 and it will contribute 13% to the country’s GDP by 2025. The Government should keep a continuous check in the form of reforms that will give a fillip to the real estate sector and will indirectly help revive the economy.”

Nish Bhatt, Founder & CEO, Millwood Kane International:

“MPC keeping key rates unchanged for the fourth consecutive time was on expected lines. The central bank keeping the policy stance accommodative indicates its intention to act on rates if the need arises. After the FM, RBI Governor has projected above 10% GDP growth for next year. CPI inflation trajectory by RBI indicates supply situation issues normalizing.

A gradual two-step CRR normalization is a step in the right direction, what needs to be seen is RBI conducting

the borrowing program for the government in a non-friction way. RBI allowing resident individuals to make remittances to IFSCs for NRIs will help boost sentiment and inflows under LRS.”

Rajeev Radhakrishnan – CIO – Fixed Income, SBI Mutual Fund: “Maintaining status quo on rates and stance was the expected outcome of the Policy Review. However, the lack of specific market intervention measures to ensure smooth absorption of the enhanced market borrowings remains the key disappointment from the fixed income market perspective. Providing retail investors a direct avenue to invest in Government securities is a welcome announcement from a longer-term perspective. While the promise of additional liquidity infusion post the unwinding of the CRR cut in 2 phases by Q1 FY22 holds the promise of OMO interventions, the immediate market action is a fair reflection of market absorption capacity. In the absence of direct and more specific upfront market intervention through OMO/Twist, the near term concerns remain of a gradual uptick in bond yields and continued uncertainty on the demand side as the borrowing program commences for FY22.”

Murthy Nagarajan, Head-Fixed Income, Tata Mutual Fund: “RBI, as expected, has kept the monetary policy rates unchanged and reiterated its stance of accommodative monetary policy. RBI has also stated yield curve is a public good, this is the reiteration of its stance. However, market players was disappointed as they expected specific measures like increase in HTM limits, OMO calendar. How the market behaves will depend upon how RBI follows with its statement. RBI governor has stated the CRR hike would allow them to do more measures to see to it that the borrowing programme goes of smoothly. This may be a tussle between the bond markets traders and RBI , if RBI does not do convincing measures, traders would take the yield higher.”

Himanshu JainVP – Sales, Marketing & CRMSatellite Developers Private Limited (SDPL): “On an expected line, the monetary policy committee (MPC) has kept the repo rate unchanged at 4% with an extended accommodative stance that will still continue to serve the markets well. Some strong liquidity measures were announced and are expected to continue which was one of the worries of the market before policy. The earlier announcements by the state government of stamp duty reduction along with reduction on premiums for developers will surely give a boost to the ailing sector and create demand among the homebuyers. The Union Budget 2021-22 also has provided a strong impetus in favor of the Affordable Housing segment. With the interest rates at a record low, the Government will continue taking affirmative measures as long as it is necessary to revive the economy and mitigate Covid-19 impact.”


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