‘The RBI maintaining status quo is another opportunity lost when it comes to creating positive sentiment for real estate’: Niranjan Hiranandani
MUMBAI, APRIL 07, 2015: The Reserve Bank of India (RBI), as part of its policy review on 7 April, has maintained status quo and kept interest rates at 7.50 per cent. “From a real estate perspective, the possibility of a rate cut by the RBI had the potential to be a key ‘trigger’, to create a positive sentiment in the real estate industry,” said Niranjan Hiranandani, MD, Hiranandani Constructions Pvt Ltd (HCPL). “It is another opportunity lost,” he added.
The RBI policy review on 7 April was the first such event following the first full budget presented by Finance Minister Arun Jaitley.
“We are all aware of the potential a rate cut would have, but the RBI Governor has been keeping watch on data about containing inflation – and that is something that had suggested one should not be ‘enthusiastic’ about the probability of a rate cut,” said Niranjan Hiranandani.
RBI Governor Raghuram Rajan after announcing the rate cut status quo on 7 April, said he was waiting for more clarity on inflation after unseasonal heavy rains raised uncertainty about food prices. He also mentioned granting banks more time to reflect its previous rate cuts – of 45 banks, just three had passed on the benefit of the previous rate cuts by the RBI to their customers.
Lower interest rates for project finance and home loans have the potential to be a key ‘trigger’ for real estate, everyone understands this, said Niranjan Hiranandani. “India’s economy has seen two unscheduled rate cuts since January, which have brought the repo rate down from 8 per cent by 50 basis points to the existing 7.50. And, it happened after a gap of two years from the previous interest rate cut,” he added.
India needs lower interest rates for high growth, and it rate cuts in the near future are expected, which in turn, will trigger a reduction in cost of borrowings. “Ideally, it should happen soon – but, it is still a wait, some more time before we have the next ‘rate cut’ by the RBI. The two unscheduled rate cuts this year happened on festive days; with Akshaya Trittiya coming up on 21 April, fingers crossed and hoping for some good news from the RBI,” concluded Niranjan Hiranandani.
Status Quo, opportunity lost, Reserve Bank of India, RBI, policy review, April 7, RBI Governor Raghuram Rajan, Finance Minister Arun Jaitley, Niranjan Hiranandani, MD, Hiranandani Constructions Pvt Ltd, HCPL, Akshaya Tritiya