Amid the growing concerns of Omicron, the Reserve Bank of India, has kept the key lending rates unchanged for the ninth consecutive time during its bi-monthly review as the bank stuck to its 'wait and watch' policy. The move has been taken positively by the realty sector as it claims that it will keep the growth momentum of festive season alive, a report by SURFACES REPORTER (SR).
The Policy decision
During the bi-monthly review, the apex institution's Monetary Policy Committee has unanimously decided to keep the repo rate unchanged at 4 percent. The repo rate is the interest rate at which the RBI lends short-term funds to banks. The reverse repo rate, the interest rate at which the RBI borrows from banks, is kept unchanged at 3.35 percent. The Marginal Standing Facility (MSF) rate is also kept unchanged at 4.25 percent.
According to Shaktikanta Das, Governor, RBI, the decision was taken unanimously the status quo on policy repo rate by a majority of 5 to 1 to retain the "accommodative policy stance". The Monetary Policy Committee (MPC) met on the 6th, 7th and 8th of this month to decide on the bi-monthly policy review.
Amid the threat of Omicron, Industry welcomes the decision
COVID-19 pandemic has dominated the RBI policy stand in the past one-and-a-half year. The RBI has maintained a status quo on these key policy rates for the past one-and-a-half year. The last time the RBI changed the policy rate was in May 2020. The central bank had slashed the key policy rates in May 2020 to historic lows to support the economy hit by the COVID-19 pandemic.
The industry too has welcomed the move saying that it will not only help the bleeding real estate sector marred by the pandemic but will also aid in keeping up the growth momentum generated during the festive season.
Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Hon. Secretary, CREDAI MCHI says, "We welcome the RBI's decision to continue with their accommodative stance keeping in mind the economic uncertainty due to the new COVID-19 variant Omicron. The low interest rates have been a crucial factor in the revival of the demand in the real estate sector. The sector saw a good festive season on the back of rock-bottom interest rates on home loans along with festive offers from good developers. The buyers are already coming back to the market and we feel that this might be the last opportunity for the homebuyers to purchase property with low interest rates before RBI decides to hike it in their next policy announcement. Also, to keep the prices down on the account of rise in raw materials prices will be a huge challenge in front of the developers."
Echoing the sentiment, Shraddha Kedia-Agarwal, Director, Transcon Developers says that while RBI’s decision was an expected one, it will help to sustain liquidity for some period amid the rising fear due to the new Omicron variant of Covid-19. “The low interest rates for the last few months has already given a boost to the real estate sector upticking the demand in the last few quarters and enhancing the confidence of the homebuyers. The decision will also help in sustaining economic stability as well as keep the real estate sector stay afloat during these unprecedented times,” she added.
Kaushal Agarwal - Chairman, The Guardians Real Estate Advisory says, "The RBI and the MPC's approach towards tackling the situation created by the pandemic and steps taken to help revive the economy will go down in history as being one of the finest. The various policy reforms along with the all-time low housing loan rates have given the much-required fillip to sales activity in the last few quarters. The all-time low rates regime has boosted the housing demand and helped the economy to get back to the pre-COVID levels."
Adding to the same, Bhushan Nemlekar, Director, Sumit Woods Limited says," The prevailing low home loan rates are already enticing for homebuyers which has immensely benefited the real estate sector. The Government will continue taking affirmative measures as long as it is necessary to revive the economy and alleviate the Covid-19 impact."
SURFACES REPORTER VIEW
India’s leading Architecture and Interior material Magazine SURFACES REPORTER (SR)too welcomes the step taken by RBI. Through our on-ground research, we could already see the worst impact made by the pandemic waves and two subsequent lockdowns. Amid all this, the festive season came as the cool breeze where buyers finally returned to the market. However, as soon as it was felt that businesses are returning towards normalcy, the scare of the latest Omicron Variant has put everything in downward spiral. RBI’s decision will not only aid the recovering realty sector but will also prove to be a boon to all the related industries including material and construction that depend upon real estate.
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