RBI Holds on the Existing Repo Rate at 6.5%
The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the Monetary Policy statement on April 6, 2023, keeping the repo rate unchanged at 6.5%. This was unexpected and has been welcomed by the real estate industry. Home loan rates will not increase thereby increasing housing demand. This pause in the rate hike will bring a sigh of relief to home buyers who are already burdened with high property rates. Binitha Dalal, Founder and Managing Partner, Mt K Kapital said, “The RBI's Monetary Policy Committee (MPC) has opted to maintain the policy repo rate at 6.50%, as well as other policy rates. The governor's bold decision to pause interest rates amidst a global trend of increasing rates is a strong show of support for India's growth trajectory. The stable interest rates are expected to drive growth in the real estate sector, as they will help maintain sales and keep interest cost on real estate development in check. Furthermore, recent changes to capital gains on debt mutual funds have led to an increase in deposits in FDs and AIFs, which should improve credit flow to the sector. FD rates are currently at an all-time high, and investors are choosing to park their money in banks as a safer choice of investment. Overall, the governor's decision is supportive of India's ambition to become the world's third-largest economy and reflects a commitment to India's growth story. This move is likely to attract foreign investment and encourage companies to set up operations in India for both manufacturing and services. ”Viswanatha Gowd, MD & CEO of LIC Housing Finance expressed, “Keeping repo rates the same is a welcome decision. This may put to rest the anxiety amongst the borrowers that emanated with the EMI increase consequent to a series of repo rate hikes. Today’s move sends a positive signal and improves the sentiments. We expect the real estate along with other sectors to build up on this as it has come at the beginning of the new financial year. The prospective homebuyers will now be encouraged to crystallise their buying decision.” Dr. Pawan Singh, MD & CEO, PTC India Financial Services commented, “The decision to maintain repo rate at 6.50% is positive news. It augurs well for the economy as well the corporate sector. The RBI has relatively balanced both inflation pressure and growth. The stabilization of interest rate for PFS is positive as we are helping meet national priority 1) meet net zero target 2) support climate finance 3) develop clean sustainable infra in the country, renewables, water, clean sanitization, green hydrogen, green mobility & infrastructure NMCG projects, transmission lines.”
Tags : Reserve Bank of India Governor Shaktikanta Das Monetary Policy Binitha Dalal Founder and Managing Partner Mt K Kapital