Real estate developers and experts are disappointed with RBI's unchanges rate cut

Q: The RBI kept its policy rate on hold at 6.75%, hoping to wait until after the government's annual budget statement at the end of February.

Bhuvan, Delhi-NCR

3rd February 2016

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Replies (2)

Hi Ashish,
Now we are expecting that the government would take thoughtful steps closer to the budget and provide further rate cuts to guide economic growth. The residential real estate has been the worst affected due to high interest rate and slow sales for the past couple of years. Current unsold residential inventory levels across India stands at over 6.9 lakh units and this would take more than 2.5 yrs to round off.

Bikram, Mumbai

3rd February 2016

Comment

Hi Bikram,
We all know that real estate sector is going through difficult time. While RBI has taken steps to considerably reduce rates, the interest rate transition from banks to the consumers has been gradual. Since January, the apex bank has reduced the repo rate by 125 basis points in 4-separate cut this year. However, mid base lending rate has declined only by 60 bps.

Asis Kumar, Delhi

3rd February 2016

I am not ignoring it but at the same time, hope that both Finance Ministry as well as the RBI push all the Banks to transfer the benefits to the end consumer, else these moves will severely stop short of benefiting the consumer and only help in buffering the bottom lines of the bank.

Raj Roy, Delhi

3rd February 2016

@Raj,
Industry body CII also hopes that the RBI would resume the rate cutting cycle in the next monetary policy, soon after the Union Budget, to complement the government's efforts to revive private investments and bring the economy back to the path of continuous growth.

Bikram, Mumbai

3rd February 2016

It is true that our Real estate developers and experts are not happy with this decision with Reserve Bank of India leaving interest rates unchanged and invoked the central bank to reduce key policy rates around the Union Budget to infuse growth in the real estate sector.

Raj Roy, Delhi

3rd February 2016

Comment

HI Raj,
The only hope now is that the banks grant more of the 125 bps policy rate cut (in the last one year) at the earliest to the end-consumers. The government needs to direct focus towards bringing about reforms and a policy makeover to bring back the weak sector.

Asis Kumar, Delhi

3rd February 2016