Reserve Bank of India (RBI) announced on August 10, its Monetary Policy Committee meeting has decided to keep the key policy repo rate unchanged at 6.5 percent. The announcement could have a positive impact on consumer sentiment, benefiting the interest-sensitive sectors of Indian economy. India Inc. leaders shared their views with Team Estrade, as follows;
Achala Jethmalani, Economist at RBL Bank
“The MPC’s decision is seen as a ‘hawkish pause’. The RBI tinkers with liquidity to align it with the current monetary policy stance to enhance transmission of prior hikes.
Upward revision in inflation forecasts while watching any persistence of idiosyncratic price spikes, strengthens the case of ‘higher for longer’, a theme that is playing out globally too. As India CPI inflation starts tapering-off in 2H FY24, we expect the repo rate to remain unchanged at 6.50%. Any price shocks could alter expectations.”
Girish Kousgi, MD and CEO at PNB Housing Finance
“RBI’s decision to keep the repo rates unchanged at 6.5% for the third time in a row, is a positive news for the real estate industry. The home buyer sentiment has been strong thus far in 2023, and the stability in rates will help keep up this momentum. Factors like attractive government incentives, increased urbanization, rising disposable income and post-pandemic pent-up demand have resulted in a rise in the appetite for housing units in India. Looking ahead, the housing finance industry will benefit from this buoyancy and continue to capitalize on this opportunity by offering a variety of home loan products at competitive rates to potential homebuyers. As the industry continues to evolve and expand, the growth trajectory is projected to enable the financing of new housing units over the next few years. We are bullish about the market opportunities in both the prime and affordable housing in the near future, and will continue to focus on the individual home loan segment.”
Murali Ramakrishnan, MD & CEO of South Indian Bank
“RBI’s MPC’s measures over the last few quarters have been effective in maintaining a tight leash on headline inflation while facilitating economic growth. The Indian economy has responded by staying resilient in the face of heightened geo-political uncertainties and a volatile international demand-supply equation. To sustain the momentum, the MPC has, for the third successive quarter, rightly maintained status quo in the policy rates. We concur with it and the retention of the ‘Withdrawal of Accommodation’ stance. Similarly, repo rate unchanged will further ensure that inflation progressively aligns with the target, while supporting growth.”
Kishore Lodha, Chief Financial Officer, U GRO Capital
“Thematically RBI is looking extremely cautious and concerned about inflation. RBI is targeting an inflation of 4% and as of now, it’s way above that. Though inflation is within the tolerance band of 6%, hence the RBI has decided to keep the benchmark rates unchanged. Since the withdrawal of Rs 2000 notes started, liquidity in the system has increased. To mitigate that, the RBI has temporarily increased the ICCR by 10%. However, it will be withdrawn on the 8th of September so that there is ample liquidity in the markets. Recent increases in vegetable and food prices may take food inflation up but it seems like it is a temporary phenomenon, and it should come down shortly. Crude prices are inching up and inflation in Europe and the US remaining high may put some pressure on domestic inflation. The RBI has guided that next year Q1 inflation would be 5.2%, hence in the next 9-12 months, rate cuts are unlikely. However, the growth forecast remains intact at 6.5%, which is the highest amongst all the large economies. To boost infrastructure funding a lot of relaxations have been given to infrastructure debt funds and on digitalisation of economy the focus remains intact.”
Pranay Jhaveri, MD – India and South Asia, Euronet
“Today’s announcement by the RBI to integrate conversational payment technology into UPI reaffirms India’s commitment and effort towards accelerating a digital payment ecosystem. This will certainly harness the innovative capabilities and plug the gap to help create a convenient and easy-to-use payment system for the users, resulting in bringing a vast number of users to the digital platform and further accelerating penetration across the nation. Moreover, using Near Field Communication (NFC) technology to facilitate offline transactions will undoubtedly boost resolution metrics and improve the customer experience.”
Rajesh Sharma, Managing Director – Capri Global Capital Limited
“We acknowledge the RBI’s prudent decision to maintain the repo rate at 6.50%, underscoring the delicate balance between inflation alignment and growth support.
With the base effect stabilizing, non-banking financial companies (NBFCs) are expected to see growth in loan segments. This is a positive step with a long-term view of promoting the growth of the MSME segment and ensuring a greater access to formal credit at stable rates.”
Madan Sabnavis, Chief Economist, Bank of Baroda
“While the RBI has expectedly not changed the repo rate or stance this time, there has been a change in inflation outlook quite significantly. Interestingly the RBI has increased the forecast to 5.4% from 5.1% with the second quarter inflation crossing 6% (6.2%). This is indicative that for the present calendar year, there is no probability of a rate cut as inflation forecast for Q3 is placed at 5.7%.
The introduction of an incremental CRR, though on a temporary basis, will impound resources of banks and have an upward impact on market rates. While there will still be surpluses in the market, the concept of impounding of resources will exert upward pressure on sentiment and hence interest rates. We can assume that this will be reversed before the festival/busy season as the RBI could have gone in for OMO to permanently take out liquidity from the system.”
Ashwani Dhanawat, CIO- Shriram General Insurance
“The measures implemented by RBI’s MPC in recent quarters have effectively balanced controlling headline inflation and promoting economic growth. Despite increased geopolitical uncertainties and volatile international demand-supply dynamics, the Indian economy has demonstrated resilience. This is reflected in our favourable economic indicators. To maintain this positive momentum, the MPC has made the prudent decision to keep policy rates unchanged for the third consecutive quarter, alongside retaining the ‘Withdrawal of Accommodation’ stance. Likewise, maintaining stability in other rates like the Standing Deposit Facility (SDF) rate, the Marginal Standing Facility (MSF) rate, and the Bank Rate will contribute to gradual alignment of inflation with targets, while also supporting growth. A revised inflation trajectory and ample liquidity should push monetary easing forward.”
Vikas Garg, Joint Managing Director, Ganga Realty
The decision will further help in stabilizing the housing demand and maintaining a positive equilibrium in the property markets. By keeping the repo rate unchanged, the RBI has maintained the monetary policy of an industry-friendly stand that will support the consolidation of trends which will churn out great results for the real estate sector. It will also help in keeping the macroeconomic conditions steady and perfectly aligns with RBI’s commitment to stamp out inflationary concerns and bring it down to 4%.
Saransh Trehan, Managing Director, Trehan Group
The maintenance of the repo rate stand by leaving it unchanged will keep the growth statistics even-grounded for the real estate sector. The housing demand has been rising continuously and the RBI MPC policy continues to add great value to property-friendly sentiments of the buyers planning to soak in money in real estate assets. The inflationary rates will further crater down by this RBI move which is undoubtedly decreasing but continues to pinch the construction and allied sectors and stymie the overall economic climate. The RBI has been impelled to take decisive actions to achieve its inflation target of 4% and by keeping the repo rates unchanged, it will significantly achieve its objectives.
Rohit Pandit, Managing Director of People’s Group, a 400 crore conglomerate with strong presence in real estate
In light of the recent RBI MPC announcement, we welcome the decision to maintain the policy repo rate at 6.50%. This move reflects a balanced approach towards supporting economic growth while managing inflationary pressures. The real estate sector, particularly the affordable housing segment, stands to benefit significantly from this decision. By keeping the repo rate unchanged, we anticipate a positive momentum in housing demand, especially given the challenges the sector has faced since the onset of the pandemic. We believe that such measures will not only boost buyer confidence but also provide much-needed stability to the real estate industry, which plays a pivotal role in the nation’s economic growth. We remain optimistic about the future and look forward to continued collaboration with all stakeholders to drive sustainable growth in the sector.
Dr Nikhil Sikri, Co-founder and CEO of Zolostays
“The RBI’s decision to maintain the repo rate at 6.50% is seen as a positive step, suggesting a potential end to interest rate hikes and aiming to balance growth and inflation. This move is expected to benefit rate-sensitive segments like affordable housing. It will help counter rising property prices and ease the financial burden on homebuyers. The interconnected nature of the real estate industry impacts the overall economy. The request is made to the government to extend pandemic-introduced relaxations in stamp duty fees to encourage property buying interest.”
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India Inc. Upbeat on RBI MPC Announcement on keeping the Repo Rate@6.5%
