Reactions to RBI’s announcement regarding monetary policy
Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital
“It is heartening that RBI acknowledges that NBFCs do a commendable job to provide credit to the underserved and New To Credit (NTC) segments in various sectors. The exclusion of credit to MSME from NDTL would expand the credit for MSMEs and this combined with the Co–Lending scheme between Banks and NBFCs can open credit for the NTC MSME customers.
The TLTRO on Tap scheme to NBFCs for incremental lending will usher in effective liquidity for NBFCs, which would work hand-in-hand with the new co-lending guidelines. The positive impact is that it would enhance the NBFCs’ ability to provide a credit lifeline to capital-starved MSMEs, including the NTC small businesses, supporting not only their revival and stabilization but also help look at growth. The credit impact can be further expanded significantly with the extension of Partial Credit Guarantee (PCG) Scheme for portfolio purchase of loans for these sectors.”
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."
Manju Yagnik, VCP, Nahar Group & Sr. Vice President, NAREDCO, West
“The ongoing accommodative stance by RBI keeping the repo rate unchanged at 4% was the need of the hour to back growth ensuring adequate liquidity in the system whereby keeping the inflation under check. The Indian economy had already witnessed a good bounce back the September-December 2020 quarter which has continued till January 2021. In the recently concluded budget provided the impetus to growth and push to affordable housing. As part of continuing efforts RBI’s decision to keep lending rates unchanged will see home loans at the same lowest interest rates of 6.9 %. This will further boost the sentiment in the real estate market encouraging sales pushing the sector on a complete recovery trajectory. We look forward to ongoing continuous support from the government to ensure complete recovery of the sector.”
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."
Amit Modi, Director ABA CORP, President-Elect CREDAI Western UP
The RBI announcements have been very much on the expected lines, even though no measures were made for real estate and home buyers particularly in the Budget gone by. It would have been a relief if some benefit were extended to the sector today, as the experts awaited it. The repo rate remains unchanged at 4%, however for the industry to revive we are still expecting some kind of stimulus from the Union government and RBI in its forthcoming policy meetings.
Dhruv Agarwala, GroupCEO, Housing.com, Makaan.com and Proptiger.com:
The decision of RBI to keep the Repo Rate unchanged along with accommodative stance is understandable at this juncture, although a further cut in the key rates would have given a boost to current demand uptick that we have seen recently. The measures announced by the RBI Governor today for liquidity enhancement in the economy is indeed a good step and was much required. Real estate has been badly hit during the pandemic and the recent Budget announcements and the RBI's decision today will help the sector to cope up with markets’ uncertainties better in the near future."
Pradeep Aggarwal, Founder & Chairman, Signature Global Group, Chairman, ASSOCHAM, National Council on Real Estate, Housing and Urban Development
Increased demand is already enjoyed by the affordable housing market, and the RBI's new unchanged stance will not have much impact on demand per se. Indeed, the RBI's growth forecasts will instill optimistic market sentiment, which will translate into good numbers for the real estate sector as well. If the economy recovers, which is likely after the RBI said in the MPC review that it will preserve market liquidity and the job market remains vibrant, then the buyer of the affordable housing segment can speed up the property ownership process. Right now, we understand the step taken in this MPC by the RBI and hope that growth forecasts will improve, leading to a vibrant real estate sector market.
Prasoon Chauhan, Founder & CEO, BlackOpal
"While the RBI has kept the repo rate unchanged, we feel that real estate will benefit from the position of the Apex bank that the NBFCs will have access to the targeted long-term repo activity (TLTRO). With this decision, we hope the liquidity situation will improve and the NBFCs will extend financial support to the real estate sector. The demand for real estate assets is already strong and we are seeing increased sales in the coming quarter due to multiple factors including low home loan interest rates."
Dr. Samantak Das, Chief Economist and Head of Research, JLL India
“RBIs decision of keeping the repo rates unchanged and maintaining an accommodative stance will provide the much needed support for the nascent recovery of the economy during 2021. The initial green shoots of recovery are already visible and is expected to gain strength in the coming quarters. This decision by the Central Bank is in sync with government’s recent Union Budget which emphasised on augmenting capital expenditure while keeping the fiscal targets at bay in the short term.
The easing of retail inflation to 4.9% in December 2020 and expected benign outlook has provided the elbow room to maintain the policy rates and support a sustained recovery of the economy. RBI’s expectation of GDP growth at 10.5% during FY 2021-22 indicates growth in jobs and incomes.
The status quo on the policy rates is a welcome step for the homebuyers as they can take advantage of the prevailing lowest mortgage rates. Banks and Housing finance companies are expected to increase mortgage lending due to stable interest rates and comfortable liquidity environment. The demand for housing, which has shown initial signs of recovery in the latter part of 2020, is expected to sustain if the favourable interest rates and price incentives by real estate developers are further supported by economic recovery and improved job scenario.”
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."
Tirthankar Datta, Partner, J Sagar Associates
“The announcement by the RBI Governor on inclusion of NBFCs in the on tap Targeted Long Term Repo (TLTRO) Scheme of the Government will be a much needed fillip for the NBFC sector after it had been reeling from a liquidity crunch since the IL&FS default in 2018 which was exacerbated by the pandemic. This is a great growth oriented and stabilising measure and in line with the NBFC sector’s demands, instead of trying to stem the liquidity to address inflation concerns.”
George Alexander Muthoot, Managing Director at Muthoot Finance
“RBI expectedly kept the policy rates unchanged and maintained accommodative stance. The Governor’s emphasis on opening TLTROs to NBFCs had been mentioned for the first time, to support stressed sectors. This reiterates the systematically important role of NBFCs in India's financial system in driving sustainable economic recovery and growth. MPC projected that Inflation is expected to remain in comfortable level. The Governor assured that the policy will remain pro-growth to support and drive economic recovery. The special support that is being given to MSMEs in credit extension reflects this assurance.”
Dinesh Khara, Chairman, SBI
“The RBI policy announcement today is an acknowledgment and continuation of doing whatever it takes to maintain an orderly, seamless and non-disruptive liquidity management policy to support debt management. Towards this end, an extension of enhanced HTM limit, relaxation of funds availability under MSF, an extension of on tap TLTRO to NBFC, deduction of credit disbursed to ‘New MSME borrowers’ from their NDTL for calculation of the CRR will calibrate credit flow and liquidity management. Allowing retail participation in the G-Sec market is a bold step towards the financialization of a vast pool of domestic savings and could be a game-changer. Furthermore, deferment of the implementation of the last tranche of Capital Conservation Buffer and the Net Stable Funding Ratio by another six months is a well-intentioned move which is crucial for banks, especially the not so strong ones to stay afloat in the current environment. Overall, a thoughtful policy and a thoughtful budget could just be the ideal mix for rejuvenating growth in the current pandemic.”
Anagha Deodhar – Chief Economist, ICICI Securities
“The MPC’s unanimous decision to keep repo rate unchanged is in line with our expectation. We expect inflation to ease further in coming months, possibly opening up room for rate cut. The MPC expects real GDP to grow 10.5% in FY22 and inflation to print at 5-5.2% in H1FY22. On the regulatory front, the most important announcements are two-phased normalisation of CRR, extending HTM limit for SLR holdings, deferment of capital conservation buffer and allowing retail investment in gilts. Overall, the MPC’s decision bodes well for growth and financial stability.”
A. K. Das, Managing Director & CEO, Bank of India
“Complementing the measures taken in Union Budget, the policy with an accommodative stance, sets the tone for faster economic recovery. Status quo on rates and favourable outlook for inflation will create conducive scenario for deepening financial market. Continued regulatory support for the borrowing programme shall also stabilise the course ahead.”
Rajiv Sabharwal, MD and CEO, Tata Capital
“RBI once again chooses to pause rates and continues with the accommodative policy stance which will aid growth in the economy. The monetary policy, post the union budget is a true indicator of the government and RBI’s pro – investment resolve to work towards helping the economy bounce back stronger.
The leading indicators which include resilient growth and softening of inflation are positive and this gives the RBI confidence to start the gradual unwind of the cumulative easing of steps.
Inclusion of NBFC for on tap TLTRO, 2-Phased CRR restoration, extension of MSF by 6m, SLR holdings in HTM dispensation are reflective of RBIs intent of liquidity management.
Allowing direct retail participation in Govt Securities markets is a welcome move which broadens the investor base. Also, from a retail perspective this opens up an additional investment avenue.”
Sarojini Ahuja, VP - Sales, Marketing & CRM Transcon Developers
"The RBI Governor’s announcement to hold the key interest rates was much anticipated. After the Government's growth focused budget, the status quo by RBI will create demand for the real estate sector further strengthening the economy. The stamp duty cut announced by the State Government has already given a much needed push to the real estate sector especially the luxury housing segment. We expect the demand to sustain in this quarter as well as these is still some time left to avail the stamp duty benefit. RBI's accommodative stance will help mitigate the effects of Covid-19 on businesses and will be a key to the recovery of real estate and the overall economy."
Manoj Gaur, CMD, Gaurs Group and Chairman, Affordable Housing Committee, CREDAI (National)
“The decision of RBI to keep the key rates unchanged is in line with the expectation of the markets. The headline inflation is on a downward spiral now which gives hope that the RBI will be able to bring down Repo Rates as the year progresses. For now, we are happy that the Apex bank wants to back growth and help the sectors that have worst affected in the last few quarters. The momentum presented by the Finance Minister in the Budget recently seems to be continuing with the MPC today.”
Mohit Goel, CEO, Omaxe Ltd.
“The RBI’s decision to hold repo rate at 4% and maintain accommodative stance in the future augurs well for the real estate sector which has seen some uptick in demand due to low lending rates. On the back of an infrastructure led Budget, we hope the RBI’s continued support to the sector will help revive growth.”
Uddhav Poddar, MD, Bhumika Group
“The Apex bank has keep repo rate unchanged, and it was on the expected lines. Looking at the whole MPC, it is obvious that the Apex bank is positive about economic development. The position exudes trust in the growth of the economy, and it has taken measures for different industries and sectors in the last few months. The real estate sector has always been looking for easy liquidity, and the RBI has decided to raise it by allowing more funds to NBFCs, which would keep liquidity in the market and may also help the real estate sector. While real estate needs several measures, it is good enough to implement the announcements made in the last few months to achieve progress. We expect banks to disburse loans more quickly to ensure that the sentiment of buyers remains high.”
Ashish Bhutani, MD, Bhutani Infra
“We were expecting the RBI to come up with unique announcements for the commercial segment that could fuel investment. We understand the status quo situation, however, since the ability to adjust the repo rate below 4 percent was restricted. The last significant announcement for the commercial segment was in February 2020, when the RBI allowed project loans for commercial real estate to be extended to the date of commencement of commercial operations (DCCO). The segment is in desperate need of liquidity, which also depends on the status of the priority lending, and we hope that the segment will get sufficient liquidity as the RBI said TLTRO is available for NBFCs.”
Raman Gupta, Director - Branding & Construction, GBP Group
“The real estate sector has always been struggling to maintain liquidity, and the apex bank in today’s MPC meeting has decided to address it by granting more funds to NBFCs, which would keep liquidity in the market and may also help the real estate sector, backbone of the country. The buyer sentiment is positive towards real estate, as it emerged as the most preferred investment option post unlock. It is likely to continue in the coming year with support extended to affordable housing and boost given to infrastructure leading to growth opportunities in Tier II-III cities.”
Harvinder Singh Sikka, MD, Sikka Group
“The recent Budget Announcements gave some support to the real estate industry today MPC announcements, coming right after the Budget, have further given hope to the sector. The accommodative stance of the RBI, together with the impetus given by the Union Budget recently, will pave the way for speedier recovery of the economy. Any move to put money in the hands of the people at this juncture will improve the demand for housing and will give the relief to the real estate developers who have been gasping for breath due to the punishment meted out by the Covid 19 pandemic.”
Kushagr Ansal, Ansal Housing and President, CREDAI, Haryana
“In its recent monetary policy review meeting, the Reserve Bank of India (RBI) retained the status quo on key policy rates in line with expectations, keeping key policy rates unchanged. Given that the repo rate at which the central bank loans money to scheduled commercial banks in India is already at a record low of 4%, there has certainly been little scope for further reductions.”
Ashok Gupta, CMD, Ajnara India
“Backed by the growth forecast, the real estate sector can rely on the initiatives previously announced by the RBI. Over the past few months, Apex Bank has taken a range of steps targeting the real estate market, such as rationalising risk-weighting criteria, connecting home loans to LTV, and reforming project-based loans. As home loan interest rates are already low, the growth curve is likely to be sustained by demand in the residential sector. With banks launching onboarding digital customers, the quicker disbursement of loans would also help the sector quickly close deals. To attract borrowers, several banks have already declared exemptions on transaction fees and other related costs.
We hope banks will lend vigorously, and the RBI will allow them to support the real estate sector, which is an important component of the Indian economy.”
Ankit Kansal, Founder & MD 360 Realtors
“After undermined by the pandemic, real estate in India is witnessing heightened demand on the back of liquidity infusion policies of the government and reduction in stamp duty in states like Maharashtra and Karnataka. In this regard, keeping the repo rate unchanged is a prudent step as it will continue to give the required liquidity cushion to the sector, where leverage plays an important role. However, government and RBI need to think more proactively towards helping stressed real estate in the country. The industry suffering from large piles of stressed/stuck inventory and to placate the growing challenge, governing bodies need to think of ways to generate need-based credit for developers, recapitalization of the NBFCs & HFCs, and forging of meaningful partnerships with private funding entities.”
Nagaraju Routhu, CEO, Hero Realty
“RBI’s decision to keep the key rates unchanged and its accomodative stance is positive for the real estate sector, which has been seeing some positive movement in demand off late. The expectation of the apex bank of 10.5 % GDP growth rate for the current fiscal certainly bodes well for the real estate industry, along with other sectors. RBI has done a fine balancing act by keeping the Repo Rate unchanged, yet taking measures to improve liquidity. The Budget Announcement and the decisions of the RBI today together will improve the scenario ahead for the real estate developers in the country.”
Akshat Taneja, MD, TDI Infratech
“RBI MPC meeting is the first after the announcement of Budget, the expectations of real estate sector remained untouched in Budget.While the Governor predicted growth rate of 10.5 per cent for the financial year 2021-22, which comes as a positive sign for the overall economy. The last repo rate cut was announced in May 2020,and it still remains unchanged due to the recovery pace exhibited by the economy.We were looking for, RBI to take an Input Tax Credit call, which would have initiated buyer’s interest more due to the profit aspect.”
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, that 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."
Himanshu Jain, VP - Sales, Marketing & CRM Satellite 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 favour 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."
Bhushan Nemlekar, Director, Sumit Woods Limited
"RBI continues to maintain an accommodative stance while focusing on economic revival and to allow elbow room for further policy interventions if required. Through the proactive measures, RBI has taken honest efforts to provide access to easier credit to smaller businesses. Also, the focus of the Union Budget 2021 was on overall economic development and one segment that stood out was affordable housing, which will benefit from the tax holidays provided for an additional year. RBI's stance is a step in the right direction and is expected to provide a fillip to housing loans, thus having a positive impact on the residential sector."