Reserve Bank of India (RBI) Governor Shaktikanta Das announced on June 8, 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 real estate sector. India Inc. leaders shared their views with Team Estrade, as follows;
Sandeep Runwal – President, NAREDCO Maharashtra: “The RBIs decision to keep repo rates unchanged at 6.50 per cent is a welcome move, but a reduction in the repo rates would further help improve home buyer sentiments and fuel home sales. It would put more money in the hands of the home buyer encouraging him to go ahead and make a home buying decision. However, the RBI has been successful in containing inflation rate within permissible limits. The Indian economy is resilient to global headwinds and has fared remarkably well. The government has initiated a slew of positive policy measures which have sustained housing sales. This in addition to the government’s decision to not raise the Ready Reckoner (RR) rates in the state for 2023-24, did boost homebuyers’ sentiments. We once again urge the government to relax stamp duty rates which will fuel interest in home buyers. We hope that these positive developments will keep the homebuyers encouraged to come forward and buy their dream home.”
Pritam Chivukula – Vice President, CREDAI-MCHI and Co-Founder & Director, Tridhaatu Realty
“The RBIs decision to keep the repo rate unchanged at 6.50 per cent is a good move which has curbed inflation levels within acceptable limits. This is the second consecutive pause in repo rate hike which will definitely improve market sentiments, propelling housing demand. We are seeing a buoyant housing sector where home buyers are coming forward to buy property. This reflects a healthy outlook for the sector and we can expect the government to continue with industry friendly policies that will sustain housing sales. We hope that the State Government steps in to lighten the homebuyer’s load by reducing stamp duty to further boost home buyer sentiments and boost home sales.”
Shachindra Nath, Vice Chairman and Managing Director, U GRO Capita, has said, “The RBI Monetary policy is in line with the market expectation since the inflation has pulled down in recent past. The retail inflation has come down to 4.7% in April 2023 which is at an 18-month low. The wholesale inflation is also in negative and again at a multi-year low. It was expected that the rates would go down from here, however, as expected, the immediate reduction in rate was not in sight. RBI has remained cautious and not changed the rates. However, its decision to permit FLDG arrangements in digital lending and formal guidelines being published soon is a big positive for the data-tech NBFCs like us. The other encouraging signs are the 6.5% GDP predicted growth and the liquidity being brought into the banking system with withdrawal of 2000 rupee notes. As the Indian economy and banking system remains stable and resilient, we see a massive credit growth, especially for the MSME sector in India. Going forward, if the inflation remains soft in coming quarters, then we can expect a reduction of rate soon. It will, of course, depend upon how the inflation is in India, and how the global situation pans out.”
Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities:
No Surprises from the RBI
“RBI in its latest monetary policy kept Repo rates unchanged at 6.5% and also maintained its withdrawal of accommodation stance. The RBI Governor in his statement mentioned that the inflation is likely to remain above their comfort level at 5.1% for FY24. Real GDP growth is projected at 6.5% which shows that Indian economy is showing signs of resilience. High-frequency indicators of economic activity are also pointing towards the same. Thus Monetary Policy Committee (MPC) of the RBI has decided to keep a watchful eye on the inflation while supporting economic growth. Stock markets have not reacted much to these announcements since it was mainly on expected lines. India 10 year bond yields have also witnessed a minor spike after the RBI announcement. It seems like 6.9% to 7.2% will act as a major range for the yields until RBI changes interest rates further”.
Siddhartha Sanyal, Chief Economist & Head Research, Bandhan Bank.
“The status quo on the repo rate in today’s MPC meeting was almost a foregone conclusion and the committee did not spring any surprise. Interestingly, despite lowering the Q1 FY24 CPI inflation forecast by 50 basis points, the CPI projection for the full year was kept almost unchanged. As expected, the RBI underscored that the vigil on inflation will remain strong as they emphasised on the importance of reaching the CPI target of 4% rather than merely staying within the tolerance band. The emphasis on achieving the 4% target and keeping the stance of policy unchanged at “withdrawal of accommodation” likely have pushed out expectations of rate cuts at the margin. Overall, the central bank is expected to keep the repo rate unchanged for several quarters, likely beyond the current calendar year. Monetary policy in India of late had been prudent, decisive and often front-loaded, a trend that is likely to continue in the foreseeable future”
Rajesh Sharma, MD, Capri Global Capital Ltd on today’s RBI Bi-monthly policy announcement, “Today’s announcements by RBI to keep the repo rate unchanged after a total 250 bps increment since May 2022 is an encouraging sign to keep the positive sentiment of borrowers and would give a big boost to demand for credit appetite. It will help to stabilize the interest rate cycle. There will be a collective sigh of relief from homeowners since they have been feeling the strain of increased interest rates and longer loan terms. The pause in the rate cycle will also aid relief for MSME borrowers who are yet to recover from the pandemic stress and higher cost of borrowing. We believe RBI is evaluating trends in inflation and the movement of high-frequency indicators and global developments like a hawk to exercise a measured approach during this period in order to pave the way for sustainable economic growth and stability in the long run.”
“Repo Rate Steady – Home Loan Interest Rates Still in Single Digits”, Anuj Puri, Chairman – ANAROCK Group, further added, “As was anticipated, the RBI has decided to keep the repo rates unchanged at 6.5%. This gives some respite to prospective homebuyers looking to avail of home loans in the near future. The unchanged repo rate can help maintain the momentum in housing sales, which has so far been firing on all cylinders in 2023. As per ANAROCK Research, we saw housing sales in first quarter of 2023 scale new heights, breaching the one lakh mark at 1.14 lakh units across the top 7 cities.
Given the current unchanged rates, the outlook for those looking to buy their first home via a home loan soon remains favourable. Interest rates from most banks will continue in single digits. With top banks, they currently hover between 8.7 to 9.65%. A future rate hike, if any, may push the rates into double digits. The persisting financial instabilities in advanced economies of the world may have repercussions in India, causing the RBI to take such a step to face these headwinds.”
Kaushal Agarwal – Chairman, The Guardians Real Estate Advisory
“We commend the RBI for maintaining the repo rate at 6.5% during FY24’s second bimonthly monetary policy meeting. This decision reflects their commitment to stability and proactive economic management. It is particularly beneficial for the real estate sector, as lower home loan rates will drive growth and encourage property investment. The availability of attractive financing options due to low-interest rates makes it easier for potential buyers to purchase homes, stimulating the market. Existing homeowners burdened by past rate hikes will also find relief. We appreciate the resilience of the Indian economy and anticipate positive impacts on growth. The RBI’s prudent decision-making will contribute to sustained development in the real estate sector.”
Vivek Mohanani – MD & CEO, Ekta World
“The Indian economy has stood out strong and resilient against global headwinds. The RBI’s decision to maintain the status quo for the second consecutive time was an expected move to focus on stability. Another repo rate hike by the RBI would have not augured well for the real estate sector as home loan interest rates are already at a higher level. Any further increase in policy rates would have had a substantial impact on buyer sentiments and affordability, which in turn could have curtailed demand. A further reduction in interest rates in the near future would be preferred to bolster overall market confidence and make it more attractive for home buyers.”
Pranay Jhaveri, MD – India and South Asia, Euronet on today’s RBI announcement about Streamlining Bharat Bill Payment System: “Streamlining Bharat Bill Payment System will help integrate backend systems efficiently for a seamless experience, which could also bring new players to the table and improve the ad-hoc payment system, It will be an advantage to bolster fraud monitoring and risk mitigation systems to ensure smooth online transactions.”
Ramani Sastri – Chairman & MD, Sterling Developers: The decision to keep the repo rate unchanged is a positive development for home buyers and investors, as it provides them with some stability and reduces uncertainty and volatility associated with interest rate fluctuations. India’s housing sector is witnessing a strong rebound in the recent past driven by various factors such as affordability, lifestyle upgradation and aspiration of customers to own homes and we see this up-cycle continuing in 2023 fuelled by both end-user and investor interest. Hence, in such a context, another repo rate hike by the RBI would not augur well for the real estate sector as home loan interest rates are already at a higher level. Any further increase in policy rates means that interest rates on home loans may hit an all-time high and touch almost double-digit, which could have a substantial impact on buyer sentiments and affordability, which in turn can curtail demand. Another hike would also lead to even higher borrowing costs for developers too. Hence, we expect a continuation of existing policy rates through 2023. Undoubtedly, a further reduction in interest rates in the near future would be preferred to bolster overall market confidence and make it more enticing for home buyers and support the growth momentum in the real estate sector.
Lincoln Bennet Rodrigues, Chairman & Founder, The Bennet and Bernard Company, known for luxury themed homes in Goa: In the residential real estate segment, buyer sentiment has continued to be robust and this has resulted in home sales showing an appreciable rate of growth. Hence, we welcome this move by RBI as it helps in holding the interest rates and sustaining the growth momentum in the real estate sector. While the rising interest rates in the recent past have certainly impacted the sales of rate-sensitive segments of affordable and mid segment housing, but it did not have any impact on the luxury housing. With the growing economy and an increasing number of high-net-worth individuals and aspirational middle-class millennials and Gen-Z, the demand for luxury properties has seen exponential rise. The rich are looking at residential real estate as a favourable avenue for end use as well as an investment due to high returns. As buyers become progressively more discerning in their choices for a signature style of living, they will be more willing than ever before to take the leap and purchase luxurious homes and this trend is expected to continue in 2023 and beyond given change in lifestyles. However, a reduction in the key rates going forward would be widely celebrated as low interest rates have been a crucial factor in the revival of overall real estate demand and improvement in the liquidity situation which is vital for the sector.
Samyak Jain – Director, Siddha Group
“The decision to maintain the status quo by RBI in its key policy rates for the second time in a row was on the expected lines. This comes at a time when property prices are on the rise, adding a huge financial burden to the end consumer. The decision will unlikely have an immediate impact on homebuyers, but it does offer some stability to the real estate sector. This may trigger the decision of many home buyers who were actively seeking to buy their desired home. We look forward to government intervention by providing some relief to home buyers in the form of reduced stamp duty rates which will lighten their burden further.”
Himanshu Jain, VP – Sales, Marketing and CRM, Satellite Developers Pvt. Ltd. (SDPL)
“Keeping the current market conditions and inflation in mind, the move by the RBI was expected to keep the economy on track and sustain financial stability. The rising property prices had already added to the woes of the homebuyers and now the decision of RBI to not hike the repo rate yet again has brought a much needed relief to the homebuyers. Also, for first-time home buyers, acquiring a home is considered as the biggest asset and this decision is likely to have a positive impact on a buyer’s decision.”
Achala Jethmalani, Economist, RBL Bank
“In a no surprise move, monetary policy maintained a status-quo on policy rates and stance. It remains in a ‘wait & watch’ mode and vigilant on inflation trajectory. We expect a pause on policy rates through CY2023 while modulating system liquidity. The window for policy pivot to rate cuts could open-up in 1H CY2024, if inflation trajectory warrants given that growth remains robust.”
RBI MPC: repo rate unchanged at 6.5%
