RBI slashes repo rate; second time in 2013
Reserve Bank of India (RBI) has announced the second repo rate cut of 0.25 percent (25 basis points) to 7.50 percent. Earlier, a similar cut was declared on January 29, 2013.
This has adjusted the reverse repo rate to 6.50 percent and the Bank Rate to 8.50 percent. The Cash Reserve Ratio (CRR) has been retained at 4 percent.
As per a realty expert, the mid-quarter policy review was according to market expectations. This move is likely to result in reduction in home loan interest rates for buyers and developers. Thus, the real estate housing demand among end users and investors seems to increase, thus paving way to further growth of real estate in India.
The RBI has cut the repo rate observing the industry needs which will bring cheer to the declining real estate market, says a Governing Council Member of Confederation of Real Estate Developers’ Association of India (CREDAI). He added that this step would allow banks to cut down the interest rates. Consequently, it would reduce the cost of funds to home buyers as well as developers.
The National President of CREDAI expressed his disappointment over the repo cut by only 25 basis points. He alleged that it is high time to revive the real estate sector and RBI has missed this opportunity. These policies are very restrictive to make housing affordable for the masses. Thus, RBI should reduce the interest rates considering the contribution of real estate to the Gross domestic product (GDP), he added.
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