Rate cut to drive growth, banks must follow suit, says India Inc

Sanjeev Sharma

Tribune News Service

New Delhi, September 29

While welcoming the aggressive rate cut by the RBI, India Inc today said banks should move quickly to pass on the rate cuts to consumers.

FICCI president Jyotsna Suri said with today’s rate cut while the policy rate has been reduced by 125 basis points, only 30 basis points has been transmitted in the form of lending rates. “FICCI is looking forward to a faster transmission by banks as this would give a boost to the much- needed investment and consumption demand in the economy,” she added.

Industry feels that with the rate cut by RBI, investment activity will pick up. Chandrajit Banerjee, Director-General, CII, said industry is happy that the RBI has finally recognised the weakness in underlying economic activity and the need for a reduction in borrowing rates to drive a recovery.

“Today’s action by the RBI has removed considerable uncertainty with regard to the direction of borrowing costs faced by industry. The corporate sector will now be in a better position to drive a recovery in investment and growth,” he added.

The struggling real estate sector is also optimistic about demand for homes picking up. Pradeep Jain, chairman, Parsvnath Developers Limited, said, “This will encourage home buyers to plan for their dream house. Banks also need to follow the same and pass on the benefit to India Inc. and the home buyers by lowering the mortgage rates thereby making home loans cheaper for the borrowers”.

Sumit Jain, co-founder & CEO, CommonFloor, “RBI’s move to reduce repo rates by 50 basis points is great news for the real estate sector, especially because the festive season is round the corner and this much-anticipated move will augur well for the sector at large. More importantly, if banks reduce home loan interest rates, it may give a major boost to the sentiments of the home buyers and thus push up home sales. All in all, it will bring cheers to both buyers and builders alike”.

The RBI has also announced a boost for affordable housing. Deepak Joshi, president and chief business officer, Religare Affordable Housing Business, said the affordable housing segment will be impacted positively. This rate cut coupled with the interest subsidy scheme announced under the Pradhan Mantri Awas Yojna Mission Housing for all 2022, will see the affordability quotient further going up for the EWS and LIG consumer segments.