CREDAI requests RBI to pass on the benefit of the Rate Cuts

      Comments Off on CREDAI requests RBI to pass on the benefit of the Rate Cuts

NEW DELHI: CREDAI, the apex developer’s body has written a letter to Shaktikanta Das, Governor, Reserve Bank of India requesting to pass on the benefit of reduction in repo rates and reverse repo rates to NBFCs and HFCs.

“During the current crisis emanating from the COVID-19, RBI has announced various measures to infuse liquidity in the system, however, real estate sector has not been able to leverage the benefits of this reduction in repo rates. One of the major restricting factor remains that while the RBI has reduced 2.50% in repo rate since January 2019, but the maximum reduction passed on by the bank to the borrowers has been between 0.7-1.3% largely from August 2019 till date, and in some case the benefit has not been passed at all,” CREDAI said in its statement.

“Real estate industry is still getting access to finance at much higher rates, therefore, provision of appropriate directions to the banks for percolating the benefits of the rate cuts to the NBFCs/HFCs needs to be made. For the real estate sector, NBFCs and HFCs are a major source of financing. This will enable NBFCs and HFCs to lend to real estate sector at a lower rate of interest, which will help the survival of crumbling industry,” it said.

“Being the second largest employer of the country, the realty sector contributes substantially to the GDP & accounts for almost 11% of banks credit besides having backward & forward linkages with almost 250 industries including cement & steel etc. Our survival henceforth becomes crucial for the economy,” as per statement.

“We, therefore, pray for immediate intervention on the following recommendations as mentioned in the enclosed letter,” it added.