Realtors Welcome RBI's Move to Improve Liquidity in System

New Delhi: Real estate developers and property consultants on Tuesday welcomed the decision by the Reserve Bank of India (RBI) to cut statutory liquidity ratio (SLR) in its monetary policy review, saying that the move would enable banks to lend more to industry, including the cash-starved realty sector.

Developers, however, demanded easing of interest rates to boost housing sales.

The RBI earlier in the day decided to keep the key policy rate unchanged but slashed statutory liquidity ratio (SLR) by 0.5 per cent to unlock about Rs 40,000 crore into the system.

"The RBI's move to cut SLR by 50 basis points to 22 per cent will give banks more headroom to lend and thereby spur lending in future. However, the much anticipated cut in rates would have been more appropriate at this juncture," Omaxe CEO Mohit Goel said in a statement.

The reduction in SLR clearly indicates that the apex bank is keen on freeing up more money for lending, which is positive for realty firms, said Sanjay Dutt, executive managing director-South Asia of property consultant Cushman & Wakefield. In the absence of a clear direction of interest rate tapering, he said the developers would be cautious in the upcoming festive season.

"In our assessment, once interest rates come off its current levels, fresh demand will be generated for housing sales, leading companies to step up launches."

JLL India chairman and country head Anuj Puri said additional funds allocated in the hands of commercial banks through a SLR cut is positive for both infrastructure and realty sectors.

"As far as interest rates are concerned, the real estate sector will have to wait a little longer for a rate cut," Mr Puri added.

"Today's announcement of keeping the key policy rates unchanged by RBI comes on expected lines. A low and stable inflation is a necessary pre-requisite for any rate revision," said Sachin Sandhir, managing director-South Asia Pacific at RICS, a global body for setting standards for property sector.

Sare Homes executive director David Walker said, "As expected, the RBI has decided to keep rates unchanged as inflation remains on the high side of targets. This means no immediate relief for home buyers in form of cheaper loans."

Lotus Green Developers vice chairman P Sahel hoped that the interest rates would be reduced soon and suggested that the industry should build on the momentum provided by the positive announcements in the budget last month.