RBI cuts CRR: Developers hail cut; hope banks to fund realty projects
Realty body CREDAI also sought cut in short-term lending and borrowing rates, repo and reverse repo, to bring down the interest rates.
By PTI | Updated:
NEW DELHI: Terming RBI's decision to reduce cash reserve ratio (CRR) as a "positive step", the realty body CREDAI on Friday said the move would enable financial institutions to fund real estate projects.
The body also sought cut in short-term lending and borrowing rates, repo and reverse repo, to bring down the interest rates. In order to ease liquidity situation, the Reserve Bank today slashed CRR, the portion of deposits banks are required to keep with the central bank, by 0.75 percentage point to infuse Rs 48,000 crore into the economy.
"This is a positive step by the RBI. This will help financial institutions to lend money to entrepreneurs for the growth of business as well as the economy," Confederation of Real Estate Developers Association of India (CREDAI) Chairman Pradeep Jain told PTI.
He expects financial institutions would fund real estate projects, as the sector is the second biggest employer in the country. Jain, however, said RBI should cut repo and reverse repo rates to reduce the cost of funds to developers as well as home buyers.
The realty sector is currently facing a tight liquidity situation, which has led to delays in ongoing projects. Recently, a report from research firm PropEquity suggested that 45 per cent of the housing projects in NCR, Mumbai and Bangalore are facing delays due to the paucity of funds and lack of demand.
The sharp increase in repo and reverse repo rates in the last two years has affected housing demand. The interest outgo of most of the developers, sitting on a huge debt, has also gone up significantly.
The body also sought cut in short-term lending and borrowing rates, repo and reverse repo, to bring down the interest rates. In order to ease liquidity situation, the Reserve Bank today slashed CRR, the portion of deposits banks are required to keep with the central bank, by 0.75 percentage point to infuse Rs 48,000 crore into the economy.
"This is a positive step by the RBI. This will help financial institutions to lend money to entrepreneurs for the growth of business as well as the economy," Confederation of Real Estate Developers Association of India (CREDAI) Chairman Pradeep Jain told PTI.
He expects financial institutions would fund real estate projects, as the sector is the second biggest employer in the country. Jain, however, said RBI should cut repo and reverse repo rates to reduce the cost of funds to developers as well as home buyers.
The realty sector is currently facing a tight liquidity situation, which has led to delays in ongoing projects. Recently, a report from research firm PropEquity suggested that 45 per cent of the housing projects in NCR, Mumbai and Bangalore are facing delays due to the paucity of funds and lack of demand.
The sharp increase in repo and reverse repo rates in the last two years has affected housing demand. The interest outgo of most of the developers, sitting on a huge debt, has also gone up significantly.
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