Reserve Bank of India (RBI) kept its key lending rates unchanged however it announced new measures that will help the economy which ailing from the impact of the second wave of COVID-19 to bounce back. This was the first meeting of the MPC after the government data showed that the economy contracted 7.3 percent in the previous financial year (FY21).

Real estate industry experts expressed their views on recently announced RBI Monetary Policy.

Harsh Vardhan Patodia, President, CREDAI National, “RBI continues to maintain an accommodative stance as it is crucial to mitigate the impact of COVID Pandemic. Focus on equitable distribution of liquidity is expected to solve the fund shortage crisis to an extent. Modifying the ECLGS scheme and clear instructions to banks & other financial institutions on sanctioning funds to labour intensive sectors like Real Estate is the need of the hour. Moratorium on principal & interest for 6 months and freezing of SMA classification for another year will aid revival of businesses and thus the economy.”

Dr. Niranjan Hiranandani, National President, NAREDCO said, “With the second wave impacting the economy in terms of a slowdown as also the rise in inflation, as expected, the RBI has maintained a status quo on the policy rates, as also continued the ‘accommodative’ stance. The low interest rate regime reflects ‘advantage borrowers’ and this is likely to continue for some more time.  The RBI has pursued the broad intent of dealing with weak spots in the economy by providing on tap liquidity, with additional lending to distressed sectors.”

Pradeep Aggarwal, Founder & Chairman, Signature Global Group, Chairman, ASSOCHAM, National Council on Real Estate, Housing and Urban Development opined, RBI has rightly taken steps to address the deteriorating health of MSMEs and various other sectors affected severely by the second wave. The low home loan interest rate has been a crucial demand by real estate, and the RBI has helped the sector by maintaining the status quo. We would suggest that the buyers take advantage of the current situation because later prices might go upwards under the pressure of increased costs.”

Anuj Puri, Chairman – ANAROCK Property Consultants stated, “Had it not been for the pandemic the RBI would have definitely taken a different stance for the benchmark rates today. Considering the rate at which inflation is rising presently in the country, the RBI would have sought to increase the key rates. However, since the economy is still under pressure due to the pandemic and inflation is rising due to supply-side issues coupled with overall consumption sluggishness, it has maintained the status quo on benchmark rates. This is the sixth time in a row that RBI has kept the benchmark rates unchanged, in clear response to the exigencies of the COVID-19 pandemic uncertainties.”

Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE, expressed, “RBI’s maintenance of an accommodative stance will help sustain homebuyer sentiments which were strengthening pre-second wave. With the repo rate and reverse repo rate being maintained at a status quo of 4% and 3.35% respectively, banks and NBFCs will continue to render loans at reduced rates to homebuyers, thus supporting demand in the realty sector.”

Amarjit Bakshi, CMD, Central Park shared, “The RBI Governor has said that the priority is to support growth, so the MPC maintained the accommodative stance. Though we were expecting real estate specific announcements, we understand that the RBI must focus on every sector for economic growth. For real estate, maintaining the repo rate will help a lot as it will help in retaining the buyer sentiment.”

“The Reserve Bank while maintaining the status quo on benchmark lending rates for the sixth consecutive time, has emphasized on striking a fine balance between growth prospects and rangebound inflationary target. The real estate sector is expected to continue benefitting from the pass-through of low benchmark lending rates to end consumers, especially in the residential segment. Interestingly, the recent legislation on Model Tenancy Act by the centre furthers the belief that the government is earnest in its attempt to provide impetus to affordable segment and rental housing market alike,” stated Anurag Mathur, CEO, Savills India.”

Amit Goyal, CEO, India Sotheby’s International Realty said, “For India’s Housing market, it’s a big positive that the Reserve Bank of India has kept the benchmark repo rate unchanged for the fifth time in a row. This is despite the fact that the retail inflation reflected by the Consumer Price Index has remained elevated. From a home buyer point of view, this effectively means that the interest rates on loans will continue to remain at a historic low.”