Reactions to decision of Monitoring Policy Committee of RBI keeping key policy rate unchanged

Monitoring Policy Committee of Reserve Bank of India today (October 4, 2017) kept key policy rate unchanged at 6% at its fourth monitoring policy review for 2017-18. Here are the reactions:

Ms.Chanda Kochhar, MD and CEO, ICICI Bank on RBI policy: “The RBI’s announcement today to keep the policy rate unchanged was on expected lines. The MPC has not viewed the recent growth slowdown as being structural in nature and is expecting it to be transient with growth prospects likely to improve over the medium term. The MPC has also reiterated the need to support investment activity and the gamut of measures that are being undertaken by government will help this process significantly. By retaining the focus on inflation targets, this policy ensures that the confidence of the investors on the Indian macro-economic indicators will continue. Further policy action will be contingent on the evolution of the output gap and its impact on the inflation trajectory.”

Mr. Sanjay Jain, Group Managing Director, Siddha Group, “The RBI maintained status quo on key interest rates in the bi-monthly policy announcement made today. We were anticipating a rate cut which would have helped spur growth of the real estate sector, but RBI's stance on the rise in inflation and economic growth forecast left very little scope for the same. Although the implementation of the recent reforms in the real estate sector such as RERA and GST have brought in the much-needed transparency and has enhanced the ease of doing business, we expect the RBI to cut interest rates in the near future to complement such reforms implemented by the Government."

Mr Deepak Kapoor, President, CREDAI Western UP, said, "The real estate market is witnessing improvement as interest rates are lower and developers are focusing on project delivery. Buyers are more concerned about possession and with the sector focusing on it, the buyers too are showing faith in the projects. Yes lower home loan interest rates help but with this unchanged repo rate there will be no change in home loan rates, but the fact is home loan interest rates are already at an all time low and buyers know it. So real estate sector will not get affected by this unchanged repo rate".

Mr. Saurabh Jindal, Joint Managing Director, SVP Group, said, "It was an anticipated move by the RBI. The effect on real estate will not be much as real estate prices are stable and buyers are enjoying the festive offers. We have seen an increased participation of buyers and hope that the situation will improve in coming months".

Mr. Prashant Tiwari, Chairman, Prateek Group, said, "Irrespective of unchanged repo rate, the buyers are already coming to the real estate sector. The sentiments have improved in the last few months and with the festive season on a lot of offers are already there for the homebuyer top benefit from the deals."

Mr. Owais Usmani, MD, Presidency Infraheights said, "After the last cut in repo rate, it was expected that this time it will remain unchanged. However, the market is sluggish and we hope to see revival riding on RERA and implementation of GST, which have instilled a sense of trust in buyers".

Mr. Ashwin Sheth, CMD, Sheth Corp Ltd. said, "The fourth bimonthly RBI Policy announcement of FY2017-18 by RBI Governor Mr. Urjit Patel maintaining status quo and keeping the repo rates unchanged at 6% was an expected move but the real estate industry needs more. Although the rate was kept on hold to assess the impact of rising inflation, declining economic growth and the tumbling of rupee as against the dollar; a rate cut at this stage would have been an ideal Diwali Gift for home buyers who have been eagerly waiting for the rates to cut down.The Government has already implemented stringent policies like RERA which is increasing the confidence of buyers. In the same vein, RBI too should have looked at the real estate sector with new optimism."

Mr. Kamal Khetan, Chairman & Managing Director, Sunteck Realty Ltd. Said, “The RBI's decision to keep the key policy rates unchanged is on expected lines, considering its priority is now to support the economic growth. For home loan borrowers, this doesn't bring in any change as the customer would have to wait for the next reset date to avail the benefit. Whereas from a developers perspective, we anticipate most aspiring home buyers to make the purchase decisions during the festive season. We welcome RBIs measures to ensure faster rollout of the affordable housing program, close the severe infrastructure gap; restarting stalled investment projects, particularly in the public sector; enhancing ease of doing business, including by further simplification of the GST; and ensuring with time-bound single-window clearances and rationalization of excessively high stamp duties by states.”