The Reserve Bank of India in its second bi-monthly policy review for the financial year 2018 – 19, has decided to increase the repo and reverse repo rates by 25 basis points. This monetary policy review, the RBI Governor Dr. Urjit Patel has decided to change its approach towards interest rates, Statuary Liquidity Ratio (SLR) and Cash reserve ratio (CRR). This means that the RePo rate now stands at 6.25 percent, Reverse RePo at 6.00 percent, Marginal Standing Facility (MSF) at 6.50 percent, CRR at 4 percent and SLR at 20 percent. This has been done keeping in view the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
Dhruv Agarwala, Group CEO, Proptiger.com, Housing.com & Makaan.com
The decision by the RBI on increasing the key rates can be seen as an aggressive stance keeping in mind the medium – term target for CPI Inflation of 4 percent, while still aiding growth. A change in the key rates on either side would have affected the economy both in the short and long run. With the rates now going up, markets are expected to dip slightly but with the stability it has achieved in the past, it is expected to recover from the slump eventually. Added to that, the uncertainties and volatility in the global markets have added to the list of reasons for the apex bank to take this approach.
Vikas Bhasin, CMD, Saya Group
Even though the apex bank has increased the rates, but we still believe that there is room for financial institutions to cut down on their lending rates for their customers. Prior to this, the last reduction was a 25 basis point cut in the key rates in the month of August 2017, the benefits of which are yet to be fully passed on to the customers. With already two months done in the financial year and markets behaving normally, the Reserve Bank could have proactively thought over another rate cut which would have definitely put added pressure on banks to reduce their lending rates.
Dhiraj Jain, Director, Mahagun Group
Looking at the market dynamics, we were projecting the RBI to maintain the status quo. Any increase in lending rate dampens the sentiments in real estate as the net cost on the buyer for the housing unit gets increased but with the market inflation not coming below the medium – term target and potential trade wars among more advanced economies of the world, the apex bank would have been compelled to take this step.
Manoj Gaur, Vice President CREDAI-National & MD, Gaurs Group
Against popular belief, the RBI has chosen to increase the key rates by 25 basis points. This would now bring another wave in the market where the sentiments will be low for quite some time. The start of the financial year had been smooth and some incentives now could have become a big sentiment driver for the entire economy. However, we expect that the markets would have settled down before the next policy review and give the apex bank a chance to rethink over this increase.
Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz
The decision of RBI to increase the rates is a clear indication that the apex bank wants to have an aggressive approach in the upcoming two months. A sufficient cushion needs to be kept for the economy as the start of the financial year had been stable and more liquidity is expected to flood the market with REITs and InvITs expected to be operational soon. With no respite in inflation, the Reserve Bank was left with no option but to increase the key rates in order to have a tighter grip over the economy.
Gaurav Gupta, General Secretary CREDAI – Ghaziabad & Director, SG Estates
The reduction in rates would have ultimately been advantageous to the customers for the reason that if banks have reduced rates, the same will apply to the end-borrowers too and real estate market will have a pool of demand to deal with. A rate cut of 25 bps could have helped ease the pressure off the market which has been balancing itself for over 6 months now. However, with an increase in the key rates this monetary policy review, we expect the market to run with only a static demand in the short run, that too on the lower side.