Realty players, broking houses hail Urjit Patel's 'push' policy

In its fourth bi-monthly Monetary Policy, the Reserve Bank of India (RBI) brought a relief for the corporate India, which was awaiting the reduction in cost of funds for long. Brokerage houses to financial institutions welcomed the first monetary policy announcement under the leadership of Urjit Patel, after he assumed charge as the Governor of the apex bank.

George Alexander Muthoot, Managing Director, Muthoot Finance Ltd welcomed the move of bringing down the key rates by 25 basis points (bps) to boost the liquidity in the system.

"A relief on the cost of funds is awaited eagerly by the corporate India, which should help them to improve financial health and plan for the next leg of growth. With the pro-growth stance of the RBI, it gives a clear hint to India Inc to push for growth, take investment decisions as it can now foresee rates to soften further," said Muthoot adding that the interest rate scenario should change for good in fiscal 2017.

The rate cut move was also seen as a booster for the real estate sector, which was faced with huge unsold inventory of properties owing to higher interest rates.

Welcoming the move, Shishir Baijal, Chairman & Managing Director of Knight Frank India - a leading real estate consulting firm, said “A 25-bps cut in policy rate is encouraging and signals well for the real estate sector. We do hope that the transmission of the rate cut is efficient and banks pass on the benefit to the customers in similar magnitude.”

The equity markets gave a thumbs-up to Patel's stance for credit growth, which was reflected in the reactions from brokerage houses. Dinesh Thakkar, Chairman & Managing Director, Angel Broking, stated that the RBI’s first policy meet after constituting the monetary policy committee (MPC) proved to be a constructive one with all the members of the committee unanimously agreeing for a 25bps cut in the REPO rate.

"We believe the rate cut was very much required for the economy, and if inflation data supports there could be another cut of 25 bps towards the end of the financial year," said Thakkar.

"While the RBI has hinted that there is a marginal upside risk to inflation, we believe this year crop output could be much better than the previous year, and hence pressure food inflation is unlikely to emerge any time soon. With G-sec yield softening the cost of funds of banks should also now come down further; this could lead to better transmission in rates for banks." he added.

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