RBI Monetary Policy Review Oct 2021 announcements: Who said what? How experts reacted to MPC decisions?

RBI Monetary Policy Review Oct 2021: The Reserve Bank of India (RBI) on Friday decided to keep benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance even as the economy is showing signs of recovery after the second COVID wave. This is the eighth time in a row that the Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das has maintained status quo.

RBI had last revised its policy repo rate or the short-term lending rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low. MPC decided to keep benchmark repurchase (repo) rate at 4 per cent, Das said while announcing the bi-monthly monetary policy review. Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.

Das said MPC voted unanimously for keeping interest rate unchanged and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target. Amidst rising fuel prices, the retail inflation stood at 5.3 per cent in August. MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2026, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.

Here is how experts and industry leaders reacted to MPC decisions after RBI Monetary Policy Oct 2021 announced by Governor Shaktikanta Das:-

Rajeev Radhakrishnan, CIO - Fixed Income, SBI Mutual Fund. 

"Given the recent RBI market actions, the outcome of the Policy was along expected lines with the central bank continuing its hesitant steps towards normalization of liquidity. In this endeavour the GSAP auction as expected was the first casualty with the RBI not announcing any incremental GSAP. At the same time, the Governor’s statement attempted to soothe markets by not projecting any of these measures as unwinding of accommodation and promising measures such as OMO/Twist/GSAP If market conditions warrant. While additional measures to absorb liquidity under 14D VRRR have been announced along with additional 28D VRRR as and when required, the measures taken currently do not address a durable absorption of the quantum of surplus liquidity. In the absence of durable absorption, it is unlikely that the short end rates would directionally  move closer to the policy rates. Market direction is expected to remain volatile as the overhang of additional measures would remain. Even as the near term domestic CPI prints may provide some relief, external factors such as commodity prices and unwinding of monetary accommodation globally could counter balance that."

Anagha Deodhar – Chief Economist, ICICI Securities

"The rate decision as well as the voting pattern in today’s monetary policy review was along expected lines. The MPC lowered inflation forecast for FY22 to 5.3% (from 5.7% in the August review), mainly due to lower expected inflation prints in Q2 and Q3. While it retained growth forecast for FY22 at 9.5%, it added that the external environment is turning more uncertain and challenging. On the regulatory front, the RBI extended SLTRO for small finance banks till Dec 2021, decided to continue with extended WMA limit till Mar 2022, and extended inclusion of on-lending to NBFCs in priority sector till Mar 2022. Also, the RBI discontinue GSAP and announced that it was open to supplementing 14-day VRRR with 28-day VRRR."

Abheek Barua, Chief Economist, HDFC Bank

"In line with our expectations, the RBI kept its monetary stance accommodative, keeping rates unchanged in its monetary policy announcement today. The RBI adopted a calibrated and patient approach towards managing liquidity and monetary policy support, recognizing that there are still some downside risks to growth. The RBI retained its growth forecast at 9.5% for FY22 while revising down its inflation forecast to 5.3% (from 5.7% earlier) given the lower than expected food inflation momentum. 

On liquidity, the central bank suspended its GSAP (government bond buying) program and provided a calendar to further increase the limit of the VRRR window to INR 6 lakh crore by December 2021. This is likely to be perceived as liquidity normalization but some caveats are in order. The extension in the limit of the VRRR window just offers a voluntary window for lower duration deposits and the end of the GSAP program implies no further infusion of liquidity in the system and was perhaps warranted given that systemic liquidity is already in excess at INR 9 lakh crore. That said, the RBI continued to commit to providing adequate liquidity in the system if need be through other operations. In the short term, while yields might pick up, we expect the upside to be capped by RBI intervention through OMOs and Operation twists if they move above comfortable levels. For the 10 year we expect a range of 6.20-6.30% in Q3 FY22, with rising oil prices and US yields exerting an upward pressure while lower domestic fiscal pressures and continued yield management by RBI to limit the upside." 

 Nilesh Shah, Group President & MD, Kotak Mahindra Asset Management Company-

“RBI policy is a " Mai Ho Naa" policy aimed to achieve multiple objectives. Keep Growth Supported, Inflationary expectations under check, Financial Markets stable, Liquidity adequate and appropriate, Yield Curve in shape and ensure smooth passage of Govt s borrowing Program. They have reassured the markets that monetarily policy normalization will be gradual and calibrated.”

Indranil Pan, Chief Economist - YES BANK

"The RBI was clear about the fact that it would be careful of not rocking the boat in any way. RBI Governor went to the extent of pointing out that we are close to the shore but there is a life beyond the shore too. RBI walked the talk with its actions by not changing the policy rates – both the repo as also the reverse repo rates. Even the stance of the policy remained accommodative with no change in the language. This means that RBI vows to stay accommodative for as long as necessary to revive and sustain growth on a durable basis. The comfort to the RBI is possibly derived from the evolution of the inflation trajectory, that appears to be much better than its own anticipation. This also led RBI to bring down the year’s Headline CPI average estimate down by 40bps from 5.7% previously. With growth conditions expected to be getting relatively better, RBI is trying to formulate a path to come out of the extraordinary accommodation during COVID-19. In my opinion, the glide path has been initiated with the G-sec bond buying programme dialed back to NIL, and the Variable Reverse Rate Repo (VRRR) auction size enhanced to INR 6 trillion by early December. The RBI also has opened itself up to increasing the VRRR duration to 28 days if need be. The actions on liquidity is expected to bring up the overnight money market rates to above the current reverse repo rate of 3.35% and we think that  RBI will then be open to adjusting the Reverse repo rate to reduce the size of the corridor. Overall, we think that RBI has kept the room open for a reverse rate repo increase in the upcoming December policy. No changes are envisaged to the Repo rate in the current fiscal and can only be addressed in FY 2022-23 after a thorough understanding of the evolving growth-inflation mix." 

Kumaresh Ramakrishnan, CIO-Fixed Income, PGIM India Mutual Fund

 "A no surprises policy, liquidity moderation retains centre stage

At today’s bi-monthly MPC meeting, the MPC voted 5:1 in maintaining the accommodative stance and unanimously (6-0) to keep the key rates unchanged. Maintaining a neutral tone, and avoiding any surprises, RBI sounded comfortable with the ongoing growth-inflation dynamics. CPI inflation for FY 22 was lowered sharply (by 40 bps) to 5.3% from 5.7% earlier, recognising the slowing monthly momentum of price increases and a favourable base effect in the coming months. Growth forecast for FY 22 has been left unchanged at 9.5%. 

As expected, the policy narrative centred around steps to withdraw the excess liquidity which is now in excess of INR 12 trillion. New measures include a calendar proposing a gradual increase in the amount to be absorbed under the 14 day variable reverse repo rate (VRRR) from the ongoing INR 4 trillion to INR 6 trillion (by December 3rd). Besides, a new 28 day VRRR is likely to be introduced if the need arises. Even after the additional liquidity suction, RBI estimates liquidity surplus under the fixed rate reverse repo at INR 2.5 to 3 trillion. 

Importantly, G-Sec Acquisition Programme (G SAP) is being discontinued given the reasonable anchoring in long end yields that has been achieved and the substantial liquidity of INR 2.37 trillion already injected in the first half of the current fiscal (under G SAP and OMOs) as against INR 3.1 trillion for full FY 2021. Despite the partial steps initiated to lower support for bonds and the liquidity moderation measures, RBI reiterated its readiness to act if the need arose.

Today’s steps are likely to lead to a further flattening in the yield curve as the short end reacts to a gradual liquidity withdrawal over time. 

Post today’s policy, we advise investors seeking asset allocation to fixed income to retain the Short / mid products viz. Corporate bond and Banking & PSU fund categories as the core with some allocation to the Dynamic bond category depending on their appetite to handle yield volatility. Investors with a shorter horizon (upto 1 year), should allocate to the Ultra Short and Low Duration Funds." 

Amit Goyal, CEO, India Sotheby's International Realty
 
"We welcome RBI's status quo on policy rates. This will mean a continuation of low home loan rates, which will keep the demand momentum for homes going. In the past couple of months, we have witnessed further reduction in interest rates of home loans to 6.5% per annum by leading financial institutions.
 
The RBI governor also announced that there are strong signals of recovery in the service industry, especially in the IT services. Expected GDP growth target for the current fiscal has been raised as well. Factors also indicate softening of inflation in the near term. All in all, this brings in a lot of confidence in the Indian economy, which itself is a big positive for the housing sector."

Shivaji Thapliyal, Lead Analyst - Institutional Equities, YES SECURITIES

"On-lending by banks to NBFCs

On-lending by banks to registered NBFCs (other than MFIs) providing credit to agriculture, micro and small enterprises and housing was allowed to be classified as priority sector lending till 30th September 2021, which now stands extended to 31st March 2022.

Impact: This will generally be supportive for bank lending to NBFCs, ceteris paribus.

Offline Digital Payments

There will now be introduction of Digital Payment Solutions in Offline mode, especially in remote areas, after successful pilot.

Impact: This will serve to popularize digital payments in areas will low internet penetration.

IMPS transactions

Upper limit for IMPS transactions has been enhanced from Rs 2 lac (Rs 0.2mn) to Rs 5 lacs (Rs 0.5mn).

Impact: Being an instantaneous transaction platform, it will aid payments via the conventional banking system, ceteris paribus.

Geo-tagging of Payment System Touch Points

This will promote wider deployment of payment infrastructure such as POS terminals and QR codes.

Impact: This will be positive for fee income for banks in the long run on the acquirer side business.

Regulatory sandbox for Fintech

A fourth new sandbox will be launched for Prevention and Mitigation of Financial Frauds.

On-tap application will be allowed for the three earlier categories of Retail Payments, Cross Border Payments and MSME lending.

Impact: This will promote innovation in the fintech space.

Support for state governments and UTs

Enhanced interim Ways and Means Advances (WMA) of Rs 515.6bn extended by a further 6 months to 31st March 2022.

Enhancement for maximum number of days of OD in a quarter and number of consecutive days of OD in a quarter also extended to 31st March 2022.

Impact: This will improve working capital lending by banks to state governments, ceteris paribus."

Siddharth Maurya, Resources Specialist 

"The apex bank has chosen to keep key policy rates intact, as predicted by the industry experts. The RBI MPC's decision augurs positivity for the real estate overall. As, the section of homebuyers will continue to reap benefits from the low interest rates prevailing and motivate fence-sitters to come forward and invest. Festive sentiment is upbeat, and it has the potential to really garner good sales. One of the most important aspect of today's MPC announcement has been bank lending to NBFC as priority sector lending - extended to 31st march 2022."

Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE 

“The RBI’s decision to maintain the repo and reverse repo rates at 4% and 3.35% has come at an opportune time, with the country gearing up for the festive season which often sees a spurt in residential sales. As loans would remain cheap, we expect residential sales to further increase in the coming months.

The RBI’s focus on reviving and sustaining growth through its accommodative stance while keeping an eye on inflation levels is expected to accelerate the economic recovery, as is evident from the fact that the central bank expects the country to grow at 9.5% in FY 2021-22. Therefore, we are optimistic that this unprecedented growth would augur well for India’s real estate market as well.”

Amar Ambani, Senior President and Head of Institutional Equities, YES SECURITIES.

“RBI unanimously decided to maintain status quo on the repo rate, citing that the economic recovery requires policy support. The central bank also maintained a hold on the reverse repo, contrary to brewing expectations of a hike given the recent auction of variable repo rate at much higher yields. Nevertheless, RBI embarked on a subtle journey of policy normalisation, announcing that there is no need for a further G-Sec acquisition program. Though RBI will continue with OMOs and operation twist and will provide adequate liquidity to support growth and government market borrowings. Meanwhile, excess liquidity will be continued to be absorbed through variable reverse repo. On the policy rate outlook, RBI’s end of GSAP is in line with the policy normalization process of global central banks. Tapering of bond purchases will likely be followed by a rate hike. Effectively, we think there is a strong chance of a 15-20bps hike in the reverse repo rate in the December policy meeting. A move on the repo rate will probably prevail by the end of this fiscal year, with RBI buying time before the supply and demand conditions stabilize.”

Pradeep Misra, MD, New Modern Buildwell Private Ltd

"The continuation of accommodative monetary policy by RBI means home loan interest rates would continue to remain low and this will help the real estate sector particularly in tier 2 & 3 cities. Amid the festive discounts and schemes being offered by the industry accompanied by lower interest rate, we expect this festive season to be a good one for the sector." 

Anuj Puri, Chairman - ANAROCK Group
 
"As expected, RBI maintained the monetary policy pause, keeping the repo rate unchanged at 4% and reverse repo rate at 3.35%. In short for homebuyers, the low home loan interest rates regime will continue in the market and help foster housing demand during the ongoing festive season. Notably, this is a period when housing sales usually surge on the back of attractive offers by developers and lending banks.

The green shoots of economic revival coupled with the prevailing low interest rates will be conducive for the residential sector in the short to mid-term. ANAROCK Research indicates that we may see at least 10-15% growth in housing demand in the ongoing
festive period (Oct.-Dec) across the top 7 cities against the preceding quarter. In Q3 2021, the top 7 cities saw total housing sales of nearly 62,800 units – already the best quarterly sales since the pandemic.

If ANAROCK's predictions are accurate, the ongoing festive quarter will see at least a 35-40% yearly rise in overall housing sales across the top 7 cities as against the same period in 2020. In Q4 2020, the top 7 cities saw total housing sales of nearly 50,900 units." 

Ramani Sastri - Chairman & MD, Sterling Developers Pvt. Ltd.

"The RBI's approach to continue with the status quo is on expected lines to enable the growth momentum that seems to have set in during the last couple of months. For home buyers, this decision will help reinstate confidence and further access to affordable home loans. It also goes without saying that the real estate industry's perennial hope is fixed on lower interest rates as it improves affordability. Home loan interest rates have already gone down substantially in the recent past, and are presently at an all-time low and property prices have been stable. Hence this is the right time for prospective home buyers to invest. Homebuyers will continue to take advantage of the lowest ever home loan interest rates. The move to reduce interest rates by few banks recently is encouraging and will pave path for robust housing demand further. We are seeing a lot of first time home buyers, who were not able to reach a decision in the previous quarters due to the lockdown are eager to conclude the deal now. There is a healthy stock of ready to move in and nearing completion inventory and that will likely be of high interest during the festive season. Real estate is definitely an asset class that one must remain invested in today and in the long term and looking ahead, we do believe that markets will see sustained growth over the next few years. With improved GDP growth estimated in the near future, we expect that the real estate sector will contribute a substantial share to overall economic development." 

Shraddha Kedia-Agarwal, Director, Transcon Developers

''RBI maintaining status quo on key policy rates was expected to maintain the financial stability before the festive season. The all-time low interest rates have already given a boost to the real estate sector upticking the demand in the last few quarters and enhancing the confidence of the homebuyers. It has also helped the sector to regain its strength as well as stay afloat during these unprecedented times. The Government's favourable policy measures along with festive deals will help sustain the demand during the festive season.''

Himanshu Jain, VP - Sales, Marketing and CRM, Satellite Developers Pvt. Ltd.

‘’Repo rate cuts have been kept unchanged by the RBI to sustain the financial stability and boost demand during the ongoing festive season. The current scenario offers excellent investment opportunities in the residential segment as affordability is at all-time high. With the banks and financial institutions further slashing the interest rates, it will provide a much-needed fillip to the real estate sales in the festive season."

Vinay Kedia - Director, Prescon Group

"The RBI and the government have been implementing a number of measures to help the real estate sector. Although the low interest rates will provide sustained growth for the real estate sector, developer's focus on project completion and delivery will be the key factors driving the real estate demand going forward. Homebuyers should take advantage of the current scenario as many major banks and housing finance organisations are offering low-interest home loans owing to the festive season ahead.”

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Hon. Secretary, CREDAI MCHI

"We welcome the RBIs decision to continue with their accommodative stance ahead of the festive season. The rising vaccinations should lead to opening up of the contact-intensive services sector which were hit hard by the virus. The low interest rates have been a crucial factor in the revival of the demand in the real estate sector. Also, the reduction in home loan interest rates by leading banks for a limited period have extended the best buying opportunity for the homebuyers. The buyers are already coming back to the market and we feel that the upcoming festive season will be a lot better than the previous years. For the next few days, the buyers can swoop in on good deals on the back of rock-bottom interest rates on home loans along with festive offers from good developers on the eve of expected price rise."

 Bhushan Nemlekar, Director, Sumit Woods Limited

"On an expected line, the monetary policy committee (MPC) has kept the repo rate unchanged with an extended accommodative stance for the eight consecutive time that will continue to serve the markets well in the festive season. The prevailing low home loan rates are already enticing for homebuyers which has immensely benefited the real estate sector. The record low interest together with the festive deals will encourage the consumers to proceed with their purchase and quickly close their transactions."

Sandeep Runwal - Managing Director, Runwal Group and President Elect, NAREDCO Maharashtra

"The RBI has always taken a proactive stance to ensure liquidity in the past few months since Covid. It is imperative that low mortgage rates would continue for at least some more time now or maybe until the end of the year. The end-user interest has increased mostly due to the all-time low home loan interest rate regime which has provided the required fuel for the growth of the economy along with the real estate industry with which several other allied sectors are linked. Apart from the low-interest rates, the consumers' realization of owning a home along with key policy measures have been the growth drivers for the real estate sector in the past few quarters and the strong demand is expected to continue in the festive season as well."

Lincoln Bennet Rodrigues, Chairman & Founder, The Bennet and Bernard Company, known for luxury holiday homes in Goa.

"RBI maintaining status quo on key policy rates was expected given the inflationary concerns in recent months and also maintaining financial stability and boost demand during the ongoing festive season. Residential demand is reviving in the pandemic context and this needs to be fostered. We have already seen early signs of improvement in economic activity following the easing of restrictions post the peaking of the second wave. Given the upcoming festive season, which is considered auspicious by a large number of Indians to make big-ticket purchases, the timing of reduction in interest rate by banks recently couldn't have been better and will lead to a substantial increase in sales. The low interest rate regime is going to be a game-changer for the whole real estate sector especially at a time when the economy is on a recovery trail. For any investor, it’s a time of great opportunity and for the end-customer, it’s a good time to buy. While the impact of Covid 19 has been high on specific segments, the luxury and second home sentiment has not been impacted as much. We hope that the government continues to pay attention to the requirements of the sector, which is one of the largest employers in the country. We would also like to see measures to enhance demand in the real estate sector by lowering of stamp duty and registration charges in the near future. The sector is set to become a large driver of the economy with its contribution to GDP projected to increase from the current 7 per cent to 13 per cent by 2025. Overall, we hope the government takes measures which strengthen the real estate sector and affirms robust infrastructure growth." 

Shishir Baijal, Chairman & Managing Director, Knight Frank India.

"The decision to maintain status quo on key policy rates is significant as it comes at the onset of the festive season. We welcome the RBI’s move to keep rates unchanged despite the inflationary pressures, as adequate liquidity, and stable repo rate will play a catalytic role in the robust recovery of the country’s housing sector. 

Over the last few quarters, there has been a fundamental change in buyers’ expectations and attitude towards home ownership, which has resulted in the residential real estate sector perform exceedingly well across all segments. Many factors, especially demand stimulants like stamp duty cut and lower circle rates along with lowest ever home loan rates, have helped in converting latent demand to sales. RBI’s accommodative stance will allow banks to continue providing home loans at the current levels. 

At this juncture we are favorably poised with an encouraging ramp up on vaccination rate across the country, ongoing festive season, and opening up of the country, the time is right to ensure an orbital shift for the industry. Significant and timely measures for a sector like real estate, which has strong linkages with several other industries, would translate into a significant push to overall economic growth of the country." 

Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani

"RBI’s decision to continue with the accommodative stance by keeping the interest rates unchanged is a welcome move for the sector. The decision will induce optimism, encourage buyer’s confidence and propel pent up housing demand.

The pandemic has reinstated the importance of home ownership. Low interest rates amidst the festive season, positive market sentiment and receding Covid-19 cases, together create a favourable condition for home-buying. To benefit from one of the best home-buying periods, homebuyers must immediately translate their plans in to action and avoid prolonging them further." 

Madhavi Arora, Lead Economist, Emkay Global Financial Services

 
“The MPC expectedly kept the key rates unchanged unanimously and reiterated its accommodative stance both on rates and liquidity. However, Prof Varma’s dissent on continuation of accommodative stance for foreseeable future continues to keep MPC in splits. Inflation forecast is expectedly reduced to 5.3% from 5.7% for FY22 (Emkay: 5.2%), while GDP growth remains unchanged at 9.5% (Emkay: 10.1%).  The RBI's stance on liquidity management was the most watched for. As we expected, the RBI did not shock the system with a reverse repo hike, and the policy is well used as a lever to prepare markets for a gradualist approach toward normalization through both communication and action. Expectedly, Markets are still assuaged that no premature tightening of financial conditions will happen and the orderly government borrowing and evolution of YC will be ensured. While the tenor and quantum of VRRR have increased, RBI has moved a step ahead by reducing further active liquidity infusion by not announcing new GSAP calendar after sterilising earlier two instalments with a simultaneous sale of bonds (OTs). While GSAPs may discontinue or get shallow and sterilized ahead, other tools like (1) possible higher intervention via the FX forwards route, and (2) partly rolling over its maturing forwards book. will remain preferred tools for liquidity management ahead. We do not see the RBI deploying any direct tightening tools like MSS, CRR hikes, FX swaps or outright OMO sales in the coming quarters. Instead, we expect the RBI to let natural stabilizers like increased credit offtake and high CIC etc. to reduce the liquidity surplus.’’

Cherag Ramakrishnan, Managing Director, CR Realty

"This approach is extremely productive and industry friendly. Specially the interest rate sensitive sectors like Realty will benefit immensely from not only all time low interest rates but also high levels of liquidity that the Central bank has allowed the banks to maintain."

Kaushal Agarwal - Chairman, The Guardians Real Estate Advisory

"The RBI and especially the MPC are to be commended for maintaining an accommodative stance for the eight consecutive time now. Their approach towards tackling the economy amidst the pandemic has been one of the finest. The various policy reforms along with the all-time low housing loan rates have given the much-required fillip to sales activity in the last few quarters. The all-time low rates regime in the festive season will boost the housing demand and help the economy to get back to the pre-COVID levels."

Ashok Mohanani - President, NAREDCO Maharashtra

"The economic growth needs to be supported through monetary policy and this is the foremost reason that the RBI has continued its accommodative stance. We have seen a revival in real estate and related sectors because of the rising vaccination numbers. Also, the interest rates will continue to be at a record low for some time. Therefore, this is the best time to buy a home as it gives the aspiring homebuyers a lifetime opportunity to purchase their dream home with various festive offers as well as all-time low interest rates."

Churchil Bhatt, EVP Debt Investments, Kotak Mahindra Life Insurance Company Limited 

“The MPC decided to persist with its accommodative policy stance and opted for a “resolute pause” in Policy Rates to provide support to “durable growth” with a firm footing. While the MPC retained its FY2022 GDP growth forecast at 9.5%, it revised its FY2022 projection lower by 40 bps to 5.3% on the back of lower food inflation.  The MPC acknowledged that crude oil and other commodity prices remain a threat to the inflation trajectory, but weak demand should limit the pass-through to output prices. Importantly, on the action front, the RBI signaled the beginning of gradual “Tapering” of liquidity by extending VRR auction tenor, a measure widely expected by markets. While the RBI has refrained from committing any GSAP amount to support bond yields, their emphasis on an “orderly evolution of yield curve” should provide comfort to Bond Markets. We expect 10Y Gsec to trade in 6.20%-6.40% range in the near term.”

 Tirthankar Datta, Partner, JSA  

“As expected by market participants the RBI has retained the accommodative stance by not increasing the repo rate. While the RBI acknowledged the liquidity overhang, it also allayed fears that the liquidity measures will remain to support growth by extending the On Tap Special Long Term Repo Operations (SLTRO) for Small Finance Banks till December 31, 2021. On a separate note, the RBI also further elaborated on the impetus towards certain payment system measures announced earlier including introduction of retail digital payment solutions in offline mode and also some new technology driven payment acceptance infrastructure for retail payments involving geo tagging . It was also announced that given the increased reach of NBFCs, an ombudsman for NBFCs will be implemented for strengthening grievance redressal.” 

Rohit Poddar, Managing Director, Poddar Housing and Development Ltd 

“The RBI’s decision to maintain the repo rate unchanged at 4%, point towards the road to economic recovery. It is good to see that overall economic activity in the country has evolved and inflation has remained lower than the anticipated numbers.  Expected gradual improvement in the domestic conditions and the successful drive of vaccination campaign will boost consumer sentiments and improvise aggregate demand in the country. We are evidently in a much better place compared to the last year owing to the proactive measures taken by the government which is resulting into achieving stability in the economic fundamentals of the country. Furthermore, this will positively impact the housing sales in the upcoming festive season and the RBI is confident of enabling economic growth with the measures taken.”

Sanjeev Chandiramani, Chief Operating Officer, Ruparel Realty, on today’s RBI Monetary Policy announcement.

 
“By holding the Repo Rate at 4%, the RBI has once again demonstrated its support towards businesses that drive economic growth of the country. These measures will enhance homebuyer’s confidence, which will aid in the industry's revival. Lower home loan rates will inspire people to pursue their goals of owning a home and will keep them motivated even in these challenging times. However, now is the moment to realize the sector's true potential by addressing some of the pending requests, such as single-window clearance, which will simplify the regulatory structure. Furthermore, we would like the government to assist the sector by addressing requests for  industry status, the need for Input Tax Credit, and a Stamp Duty reduction which would help in gaining high momentum while putting the real estate sector on a high paced growth trajectory.”

Jimeet Modi, Founder and CEO Samco Group

" The RBI has been a juggler of many balls in the past year and till now, never have they once faltered on any front. In fact they have managed to hold fort despite the pandemic. For the eighth consecutive time, the MPC has stuck to its accommodative stance and maintained a balanced policy with no change in repo or reverse repo rate. The Committee has derived comfort from the declining inflationary tendencies and have lowered the inflation forecast for FY22 from 5.7% earlier to 5.3% now. It seems their strategy going forward is a classic textbook one with liquidity management, the first check on their agenda, followed by a hike in reverse repo. The liquidity VRRR auction calendar till December is a welcome move which definitely gives further clarity on the liquidity tapering front. If the Fed’s stance in Nov goes as expected, then December could be the time the RBI finally begins to reduce the gap between the repo and reverse repo rates. In sum and substance, this times policy didn’t throw any curveballs, hence was well received by the market."

Vikas Wadhawan, Group CFO, Housing.com, Makaan.com and Proptiger.com

"We welcome the RBI's decision to keep key policy rates unchanged. This means that interest rates on home loans will continue at historical low during the festive season, which is crucial for revival of the  housing sector as well as the Indian economy.Bank lending to NBFCs for priority on-lending is extended for 6-months, which will ease out the liquidity situation.

Low mortgage rates coupled with developers' festive offers will drive demand in a big way this quarter. We request all State Governments to reduce stamp duties on registration of properties till December. This could turn out to be a game changer.

Nevertheless, low home loan interest rate, stable housing prices and  developers' offers in the form of freebies and relaxed payment plan makes this festive season the best time to buy a property."

Amarjit Bakshi, CMD, Central Park

"As the RBI Governor stated that supporting growth is a top priority, the MPC kept its accommodative stance. The RBI ensured appropriate liquidity in the system when everyone is struggling with it; liquidity injected into the system in the first six months of the current financial year was Rs 2.37 lakh crore. Though we had hoped for real estate related announcements, we recognise that the RBI needs focus on all sectors to achieve economic development. Maintaining the repo rate in real estate will help a lot in terms of retaining buyer sentiment."

Pradeep Aggarwal, Founder & Chairman, Signature Global Group & Chairman - National Council on Real Estate and Housing, ASSOCHAM

"The apex bank's sustained accommodative attitude is greatly appreciated. Low home loan interest rates are already helping the sector, and the RBI has helped the sector by maintaining the status quo. Customers should take advantage of the current situation because prices may rise in the future owing to higher raw material costs."

Ankit Kansal, Founder & MD, 360 Realtors

"Economic growth alongside reining any uptick in inflation is the key priority of the government and central bank of India. Hence, the unchanged repo rate (and reverse repo rate) was expected. After the downcycle caused by the 2nd wave, the Indian economy is once again looking upbeat. FICCI has projected a 9.1% growth in FY 22 pinned on 12.9% & 8.6% expansion in the industrial and service sector respectively. A resurgent real estate sales and growth in agriculture output will further give a boost to the economy. However, the government bodies should also ensure to keep the lending rates low, as it will continue to dovetail the economy in a positive direction and create the ground for faster recovery."

Ram Raheja, Director and Head-Director & Design at S Raheja Realty:

“The decision to maintain the repo rate and reverse repo rate by the RBI is in line with expectations. It has also affirmed to its accommodative stance, which will provide stability to the markets and give much-needed liquidity. This status quo will further allow demand creation including for high involvement products like real estate. RBI's resolve to keep easy system liquidity and low interest is key to the recovery of the real estate industry and the overall economy. The real estate sector is expected to continue benefiting from the pass-through of low benchmark lending rates to end consumers, especially in the residential segment. The optimism of RBI regarding economic growth is welcome; It will also help in sustaining economic stability as well as keep the real estate sector stay afloat during these unprecedented times. The demand for homes is likely to continue to gain momentum going forward’’

Nutan Gaba, Chief Financial Officer, HomeFirst Finance

"As expected, RBI continued its status quo on the policy rates with an accommodative stance. Given the normal monsoon season and resulting in robust production, Inflation is likely to remain steady. This also would mean that low-interest rates, as well as liquidity support. The policy also highlighted liquidity support to MSMEs as well as sectors affected by the pandemic. This is positive for the affordable housing customers and will support home buying aspirations across segments." 

Bekxy Kuriakose, Head – Fixed Income, Principal Asset Management  

"The RBI MPC unanimously voted to keep status quo on the Repo rate. The reverse repo rate also remains unchanged at 3.35%. With a vote of 5:1, the stance is also unchanged at accommodative reflecting the continued need to support, revive and sustain growth. On inflation front key point made by the Governor in the Press Statement was that while there are input cost pressures, pass through to output prices has been constrained by weak demand conditions. Thus headline CPI has been contained in the 4+/- 2% band broadly so far. Das was at pains to clarify that while some developed and emerging market economies have started hiking rates, these are those countries where demand conditions are strong and inflation has crossed the tolerance level. This indicates that RBI is comfortable with current trajectory of domestic headline CPI which is within our tolerance band and this is the rationale for no change.
 
The overarching theme from today’s Policy review announcements is one of “gradualism”. Other key words are “calibrated and non disruptive”. Thus while GSap programme is discontinued for time being, VRRR (Variable Rate Reverse Repos) auctions are being increased in quantum from Rs 4 lakh cr to Rs 6 lakh cr and 28 day VRRR tenor has been mentioned and likely to be introduced soon. The emphasis was on continuing to ensure no major disruption in markets either on liquidity front or on interest rate front.

Post policy, ten yr gilt benchmark has risen, while 5 yr gilt and shorter tenors remain stable. Market fears of any tightening or change in stance have been laid to rest. However long end may remain under pressure due to withdrawal of Gsap support but the window has not been entirely closed as indicated by the Governor. Any sharp upmove in yields may see OMO announcements or OT (Operation Twist).

Looking forward while no rate hikes or change in stance is imminent and next few inflation prints may remain within RBI’s comfort band, in Calendar year 2022, there is likelihood of reverse repo rate being hiked, liquidity conditions being further normalized and short term money market rates rising by 25-50 bps. This rests on an assumption. 

We would advice debt investors with 1 yr horizon plus to allocate to short term debt categories and with shorter horizon to allocate to low duration, ultra short or money market categories." 

Divaker Bhalla, Founder- iProp.Money

"RBI has given a reason cheer to the housing sector by keeping the policy rates unchanged. This will bring in the lost momentum in the sector during festival season and much needed activity in the sector. The constant stance on policy rates shows RBI and Government commitment towards the real-estate industry and millions of people getting employment in this unorganized sector."

Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities 

"The RBI policy, as expected, remained cautious and in a wait-and-watch mode. Even as it increased the quantum under the 14-day VRRR auctions and opened the option of 28-day VRRR auctions, it adequately sounded out on its dovishness and the need to ensure liquidity conditions remain comfortable. We do not see the RBI in a hurry to normalize liquidity conditions as well as the reverse repo rate in the near term. We continue to see the February policy as the earliest period of review for the RBI to narrow the policy rate corridor by raising the reverse repo rate."

ASSOCHAM 

"ASSOCHAM today hailed the decision of the RBI's Monetary Policy Committee to stay on the course of accommodative policy interest rates, without yielding to demand in certain quarters for a policy reversal. 

Commenting on the stance, ASSOCHAM Secretary General Mr Deepak Sood said, RBI has wisely responded   to India-specific needs for continuation of supportive interest rates for an economy which, as rightly pointed out by Governor Mr Shaktikanta Das, is near the shore and not quite on it. Reversal of the easy monetary stance by a few developed nations need not be the template for India, the RBI has rightly emphasised.

On inflation, Mr Sood said, ASSOCHAM has been voicing a stand similar to what is mentioned in the RBI policy statement with regard to the need for 'calibrated reversal' of indirect taxes on fuel. ''We have been consistently pressing for including petroleum products into the GST network for lowering the cost push inflationary pressures''.

On growth prospects, RBI's assessment is largely on course and the GDP growth for the FY' 22 might even reach the double digit, given the unfolding of pent-up demand, as is being witnessed.

ASSOCHAM also welcomed several other measures including offline digital payment in the hinterland, extension of on lending to the priority sector by NBFCs and support to the small finance banks for helping MSMEs.

Raising the transaction limit on the Immediate Payment Service (IMPS) from Rs. 2 lakhs to Rs 5 lakh would give a boost to digital banking and help small businesses in operational efficiencies. Digitisation would also get an impetus from the proposed framework on geo-tagging for Payment Approval infrastructure."

Jyoti Prakash Gadia, Managing Director, Resurgent India, Sebi Regd. Category 1 Merchant Bank and Investment Bank

"On expected lines, the RBI  has kept the policy rates unchanged. The tone and tenor of the accommodative stance have also been continued in line with the Last Policy. This indicates its intent to support sustainable growth which is at a nascent stage.

With favourable indicators on the inflation front and growth signals, the RBI has rightly decided on the status quo.

 Without indicating any timing for the normalisation process in due course, the discontinuation of G Sap (Government securities Acquisition Process)  is a step in the right direction at this stage considering the status  Government programme.

At the same time, RBI has tacitly underlined the need for Fiscal Policy Measures at this stage by way of Increased Govt Capex and tinkering with taxes on Fuels to boost long term growth and check current inflationary trends.

The possible use of 28 days VRRR, besides the current 14 days  VRRR mechanism provides an additional tool in the hands of RBI for liquidity rebalancing."

Rohit Poddar, Managing Director, Poddar Housing and Development Ltd 

“The RBI’s decision to maintain the repo rate unchanged at 4%, point towards the road to economic recovery. It is good to see that overall economic activity in the country has evolved and inflation has remained lower than the anticipated numbers.  Expected gradual improvement in the domestic conditions and the successful drive of vaccination campaign will boost consumer sentiments and improvise aggregate demand in the country. We are evidently in a much better place compared to the last year owing to the proactive measures taken by the government which is resulting into achieving stability in the economic fundamentals of the country. Furthermore, this will positively impact the housing sales in the upcoming festive season and the RBI is confident of enabling economic growth with the measures taken.”

Anand Nevatia, Fund Manager, TRUST Mutual Fund

"A 5-1 vote on stance clearly reflects that majority of MPC still comfortable and convinced with accommodative stance. A “favourable than anticipated” inflation trajectory and downward revision of CPI at 5.30% has allayed any fears of near term rate hikes. The Governor has assured the markets of ample liquidity while announcing higher VRRRs to absorb the excessive systemic liquidity. Absence of GSAP has impacted markets negatively specially at the longer end of the curve. The CPI readings will be low for next couple of months. Inflationary expectations could lead to underperformance of longer maturity bonds. Easy liquidity will support performance of funds up to maturity of 3 years."

Honeyy Katiyal, Founder of Investors Clinic

"As a consultant in real-estate, we would have loved to see RBI announcing a rate cut to support the demand in the real-estate sector for the coming festival season. This would have been an economic booster for the real-estate housing sector which has suffered a lot in the last two and half years. Policy rates at these levels are favourable as well. The demand for housing has shown initial signs of recovery and is expected to sustain, with price incentives provided to investors by real estate developers , which will definitely further support the economic recovery and improved job scenario. Also, the real-estate sector runs on sentiments a whiff of positivity will turn the tables this festival season for the developers and real-estate players." 

 Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani

"RBI’s decision to continue with the accommodative stance by keeping the interest rates unchanged is a welcome move for the sector. The decision will induce optimism, encourage buyer’s confidence and propel pent up housing demand.

The pandemic has reinstated the importance of home ownership. Low interest rates amidst the festive season, positive market sentiment and receding Covid-19 cases, together create a favourable condition for home-buying. To benefit from one of the best home-buying periods, homebuyers must immediately translate their plans in to action and avoid prolonging them further."

Shiv Parekh, founder of hBits

"The real-estate sector is based on sentiments; the positive indicators are enough for real action and momentum. Despite the gloomy environment across businesses, commercial real-estate has not only held ground but has also given good returns post Covid to investors. Our investors have seen a steady return on investment even during tough times. RBI keeping the policy rates is the right step towards creating a positive investment friendly environment. This step will go a long way to improve business environment and easy access to capital will help economic recovery."

Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities

"The RBI policy, as expected, remained cautious and in a wait-and-watch mode. Even as it increased the quantum under the 14-day VRRR auctions and opened the option of 28-day VRRR auctions, it adequately sounded out on its dovishness and the need to ensure liquidity conditions remain comfortable. We do not see the RBI in a hurry to normalise liquidity conditions as well as the reverse repo rate in the near term. We continue to see February policy as the earliest period of review for  the RBI to narrow the policy rate corridor by raising the reverse repo rate."

YS Chakravarti, MD & CEO, Shriram City

 “The RBI holding rates and maintaining an accommodative stance is conducive for tepid credit growth. Lower interest rates ahead of the festive season will push up demand from customers who have been sitting on the fence. Demand for Two-wheeler and Gold loans has been picking up, and we are poised for demand recovery in 2HFY22 with low interest rates and policy support. The RBI has also extended PSL status for banks lending to NBFCs for on-lending to MSMEs till Mar-22, thus regulatory measures, reliefs, and benefits to MSMEs will aid struggling small businesses hit by the pandemic.”

Rajiv Sabharwal, MD & CEO, Tata Capital Ltd.

"RBI maintains rate status quo and continues with the accommodative policy stance. This reflects RBI’s resolve to walk the tightrope required in achieving balance between durable growth and emerging inflation dynamics at this juncture. The economy is headed towards a broad based recovery path and is emerging stronger from the second wave of the pandemic.
 
Over the last 2 months, we have seen moderation in CPI. Decline in food inflation and favourable base effect offer cushion for the  RBI to drive its agenda for growth in the economy. However the RBI will be cautious of the surge in crude prices and the cascading impact it can have on the inflation trajectory 
 
The RBI remains committed to maintain adequate systemic liquidity to achieve growth and pre-empt any volatility in the yield curve. The markets should draw comfort from this guidance and assuage any concerns coming out of a faster than expected policy normalisation. A balanced and orderly policy normalization in a phased manner will be welcome."

Deepshikha Kumar, Founder & CEO, SpeakIn

"The RBI’s decision to not change the repo rate and reverse repo and keep them at moderate levels will definitely improve liquidity in the economy, and help MSMEs and small businesses coping with financial challenges. MSMEs which are considered the backbone of the Indian Economy have been worst affected during the pandemic and an accommodative Monetary Policy can play a vital role for them. Moreover, projecting a lower inflation rate, i.e. from 5.7% to 5.3%, for the FY22 will encourage consumers to diversify their spending."

YS Chakravarti, MD & CEO, Shriram City 

“The RBI holding rates and maintaining an accommodative stance is conducive for tepid credit growth. Lower interest rates ahead of the festive season will push up demand from customers who have been sitting on the fence. Demand for Two-wheeler and Gold loans has been picking up, and we are poised for demand recovery in 2HFY22 with low interest rates and policy support. The RBI has also extended PSL status for banks lending to NBFCs for on-lending to MSMEs till Mar-22, thus regulatory measures, reliefs, and benefits to MSMEs will aid struggling small businesses hit by the pandemic.”

Deepak Chandnani, MD- South Asia & Middle East, Worldline
 

“The proposed framework to enable digital payment solutions in offline mode will certainly push forward their adoption particularly in rural pockets of the country that have a higher preponderance of poor network connectivity and quality. While this is primarily for the acceptance of small value transactions only, it is a big move towards achieving the overall financial inclusion objectives of the country. In addition, the upcoming sandbox cohort on Prevention and Mitigation of Financial Frauds is the need of the hour since it will promote greater trust of the ecosystem; trust is usually cited as one of the primary reasons why people don’t do digital transactions.”

Narayan ‘Naru’ Ramamoorthy, Chief Revenue Officer, Global PayEX

“Following the earlier announcements on the round-the-clock RTGS facility and increase in the settlement cycles of IMPS, the latest proposal focused on increasing the transaction limit for IMPS from Rs. 2 lakhs to 5 Lakhs is a much-needed move. I believe this will encourage businesses to move away from paper-based transactions and push the adoption of digital payments. It will also help large corporates and MSMEs bring in greater flexibility and an obvious cost efficiency by eliminating manual efforts and the errors accompanying these processes. Add to it the real gains from this move that will be seen in increased working capital management, enhanced transactional speed across the supply chain, as well as improved cash flow. 

Further, the introduction of digital payments solutions in offline mode can be a great initiative when it extends to the corporate customers and B2B sector. Here, many businesses based in smaller and remote towns and cities can also leverage and benefit from the shift in digital payments.”