Banking & Insurance

RBI plays it cautious, repo rates unchanged

RBI repo rates unchanged at 4%

Despite inflation edging higher in the aftermath of the Russia-Ukraine war and surging oil prices, the RBI has again decided to keep the repo rates unchanged at 4% and reverse repo rate at 3.35%. This is the eleventh consecutive time that the RBI maintained status quo amid the current uncertainties and the global economy also seeing a sharp rise in inflation.

Anuj Puri, Chairman – ANAROCK Group: The real estate industry had been gearing up for an increase in the repo rates, and the fact that this has not happened is obviously positive for home loan borrowers. Developers’ input costs have been inflating steeply and a hike in property prices is not more or less inevitable. Moreover, the acquisition cost in Maharashtra has gone up by 1% on account of the metro cess applicable from this month. To this sombre backdrop, increased home loan lending rates would have been a considerable setback.

Homebuyers have a continued opportunity to avail of decadal low home loan interest rates. The overall cost of living has increased significantly since the Ukraine debacle began playing out, and the RBI has taken a proactive and necessary step to maintain relative housing affordability in the country.

Shri Atul Kumar Goel, MD and CEO of Punjab National Bank (PNB): To impart flexibility in liquidity management, Reserve Bank of India has tweaked its liquidity framework, introducing standing deposit facility through which it will absorb surplus liquidity. As the economy is limping back to normalcy RBI restores, LAF corridor to 50 bps as in pre-covid level with SDF as floor at 3.75% and MSF as ceiling at 4.25% which will also provide financial stability. Increasing SLR holding in Held-to-Maturity category by 100 bps till March 31, 2023 banks will be able to better manage their investment portfolio.

With diversification in financial industry, RBI proposal of a panel to review status of customer service at RBI-regulated entities was a necessary step. Cardless cash withdrawal now being available at all bank branch and ATMs via UPI will help prevent frauds and improve ease of transactions. Rationalisation of risk weights for individual housing loans to be extended till March 31, 2023 which will provide impetus to Housing loan demand.

Sushanta Kumar Mohanty, General Manager – Treasury, Bank of Baroda: This is a balanced policy. RBI has shown the path for gradual withdrawal of liquidity, similar to the US Fed’s approach. This is a clear change of path as compared to last policies.

SDF was a long pending demand and dependence on Reverse Repo will reduce. With yields rising above the 7% mark today post policy, our expectations are that the 10-year benchmark will rise to 7.25% this year.”

Mr. Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd: Today’s announcement by the Reserve Bank of India to rationalize the risk weightage on housing loans and link them to loan-to-value (LTV) ratios till March 2023, will boost the nation’s real estate sector. This announcement will encourage banks to continue lending more to individual homebuyers without feeling the stress on their balance sheets. It will effectively result in higher credit flow to the housing sector and eventually make the residential segment a lucrative investment for aspirational homebuyers.”

Related: Housing Prices Hike in 2022, Affordable Housing Demand Sinks Further: Survey

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