The Reserve Bank of India (RBI) has decided to hold the repo rate at 6.5% during its fifth bi-monthly Monetary Policy Committee (MPC) meeting for the current fiscal year. This marks the 11th consecutive occasion since February 2023 that the central bank has opted for this steady approach, reflecting its commitment to ensuring financial stability amid dynamic economic circumstances.
Governor Shaktikanta Das, speaking after the three-day meeting, highlighted the need to strike a balance between controlling inflation and supporting economic growth. By keeping the repo rate unchanged, the RBI continues to offer relief to borrowers, ensuring stable lending rates and providing much-needed support to sectors such as housing and consumer loans.
This MPC meeting was also notable for the presence of three new external members — Ram Singh, Saugata Bhattacharya, and Nagesh Kumar. Their diverse insights are expected to enhance the monetary policy-making process, helping the country navigate both global uncertainties and domestic economic challenges.
Industry Experts Opinion
Mr. Vishal Jumani – Joint Managing Director, Supreme Universal
“The RBI’s decision to keep the repo rate unchanged is a great move for the real estate sector. As per the Knight Frank report, the sector currently valued at $493 billion and contributing 7.3% to India’s GDP, we’re optimistic about its future growth prospects. Our projections indicate that the sector will increase to Rs 5.8 trillion by 2047, accounting for 15.5% of India’s economic output, making this stability in interest rates a timely and welcome move. This stability in interest rates is particularly beneficial for high-value markets like Mumbai and Pune.
With steady interest rates, buyer confidence will likely increase, driving steady demand and supporting sector growth. Moreover, the positive correlation between tax relief measures and high-end property sales is expected to persist. The combination of stable interest rates and reduced stamp duty will continue to drive sales of properties. This favorable environment will benefit both developers and homebuyers, ultimately fostering growth in the real estate sector.”
Mr. Dharmendra Raichura – VP & Head of Finance at Ashar Group
“The Reserve Bank of India’s (RBI) decision to keep the repo rate unchanged significantly supports the business goals of the real estate sector and the dreams of homeowners. The real estate sector, ensuring stability in interest rates and fostering sustained growth in the housing market. This move is particularly welcome after recent market volatility, providing much-needed support to the sector.
A rate cut would have been a timely stimulus to revitalize consumer demand across various industries, ultimately boosting economic growth in the third quarter of FY 2025.
The real estate industry has welcomed the RBI’s decision, citing the importance of stability in interest rates for buyer confidence and sustained demand in the housing market. With the repo rate remaining unchanged at 6.5%, homebuyers and investors can expect a favorable borrowing environment, which is likely to drive growth in the sector.”
Ms. Nipa Bhuta, Head of Strategy at Ashar Group
“The repo rate plays a significant role in shaping the direction of the real estate sector. An unchanged repo rate often makes home loans more affordable for buyers, thus stimulating demand for residential properties. This can benefit the market by increasing sales volumes and supporting price appreciation.
In Mumbai, the residential real estate market has been showing positive momentum. The region’s unsold inventory is at a decade-low, and demand from end-users remains strong, bolstered by affordability, which continues to support market growth.
The Mumbai Metropolitan Region (MMR) is projected to maintain its leadership, with a modest price increase, especially in key residential areas, driven by ongoing infrastructure projects. The market’s strong fundamentals, such as a low inventory-to-sales ratio, suggest continued growth for the sector. With future infrastructure developments like metro expansions and a continuous demand for housing, Mumbai’s real estate sector could see a sustained upward trend, even into 2025 and beyond.”
Mr. G Hari Babu National President of NAREDCO
“The Reserve Bank of India’s decision to maintain the repo rate at 6.5% and reduce the cash reserve ratio (CRR) by 50 basis points to 4% is a balanced approach to sustaining economic stability while fostering liquidity. This move aligns with the real estate sector’s ongoing need for growth support amid evolving market dynamics.
The unchanged repo rate ensures continued affordability for homebuyers and stability in lending rates, both critical factors in sustaining the demand momentum witnessed in residential and commercial real estate. The reduction in CRR is a welcome step, as it releases additional liquidity into the banking system, providing financial institutions with greater flexibility to offer loans at competitive rates.
Buyer sentiment in the real estate sector remains positive, and real estate has received the highest investment of 17% in Alternative Investment Funds during the first half of 2024-25. This move by the RBI will further boost the real estate sector. However, we hope that the RBI will consider reducing repo rates in its next decision to give a greater impetus to affordable housing
For the real estate sector, liquidity is pivotal in driving construction activity and meeting delivery timelines, especially for affordable housing projects that cater to a significant segment of aspiring homeowners. The neutral stance reflects a careful consideration of inflationary pressures and economic growth, which reassures the industry of a stable monetary policy environment.
This policy announcement underscores the RBI’s commitment to creating an enabling ecosystem for businesses and consumers alike. The real estate industry remains optimistic about its role in contributing to India’s economic growth trajectory under such supportive measures.”
Dr. Niranjan Hiranandani, Chairman, NAREDCO
“The recent RBI monetary policy announcement didn’t deliver the anticipated 0.50 bps repo rate cut, raising significant concerns about India’s economic growth trajectory. A rate cut in CRR will augment the credit lending capacity of banks, making more funding available in the market to enhance business growth. This adjustment retains a confident and optimistic tone while clearly conveying the potential benefits of such a policy change for India’s economic landscape.
While the RBI argues that high interest rates help curb food inflation, this view neglects the pivotal supply-side constraints affecting food prices. Though monetary policy influences demand, it is supply-side factors that substantially drive food inflation. A strategic reduction in interest rates could have stimulated sustainable GDP growth while addressing inflation through supply-side measures.
Lower interest rates would have made home loans more affordable, propelling demand in the real estate sector, particularly for affordable housing. Despite stable macroeconomic conditions and a robust domestic economy, the absence of a rate cut threatens the growth of affordable housing. The Indian real estate sector is currently experiencing strong momentum, driven by increased banking and foreign”
Ms. Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP, NAREDCO, Maharashtra
“The RBI’s decision to retain the repo rate at 6.5% for the 11th consecutive time is a balanced approach to manage growth and inflation. With India’s GDP expected to grow at 6.5–7% in FY 2024-25 and the real estate sector contributing 7% to the economy, this stability is vital for maintaining economic momentum. A steady rate ensures consistent repayment terms, which increases the confidence of homebuyers and encourages investments in the sector. With property prices rising, stable lending conditions and a steady market make real estate a key driver of economic growth, boosting demand and contributing significantly to India’s economic progress.”
Mr. Piyush Bothra, Co-Founder & CFO, Square Yards
“The RBI’s decision to keep the repo rate unchanged is slightly disappointing, as the general expectation was for a rate cut of at least 25 basis points. However, the decision to reduce the Credit Reserve Ratio (CRR)) by 50 basis points is expected to help increase liquidity in the banking system and boost overall credit disbursements. The real estate sector continues to be buoyed by significant pent-up demand and improved affordability. We do not anticipate any negative impact from the unchanged rates on demand as we enter the final quarter, which is traditionally the strongest quarter of the financial year.”
Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd
“The Apex Bank’s decision to maintain the repo rate at 6.5% while reducing cash reserve requirement by 50 basis points, reflects a balanced and prudent approach to sustaining economic stability while fostering growth. This continuity provides a stable environment for the real estate sector, enabling developers to plan with confidence and homebuyers to benefit from favorable borrowing costs.
However, a rate cut in the future could infuse much-needed liquidity into the real estate sector, accelerating growth and enhancing accessibility for buyers. As India continues to experience robust economic activity, this stable monetary stance will act as a catalyst for long-term growth and investment across industries.”
Mr. Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited
“After a prolonged pause, the RBI’s monetary policy has brought some good news. While the central bank kept the repo rate unchanged, it decided to reduce the Cash Reserve Ratio (CRR) that banks are required to maintain. This move will free up additional funds for banks, enabling increased lending to both retail and institutional borrowers.
A lower CRR also reduces banks’ costs, potentially leading to a decrease in interest rates. The housing market, particularly the luxury segment, continues to exhibit strong demand, and this reduction in CRR is expected to further boost momentum. With a growing economy and a rising preference for luxury real estate projects, demand in this segment is likely to remain robust.”
Mr. Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution Pvt Ltd
“The central bank has kept the repo rate unchanged for the 11th consecutive time since February 2023. However, the good news is the reduction of the Cash Reserve Ratio (CRR) from 4.5% to 4%, reflecting the RBI’s careful approach to balancing mixed economic signals. While inflation remains above the comfort zone, the RBI continues to prioritize price stability alongside economic growth.
Although the repo rate—the rate at which the RBI lends to commercial banks—remains unchanged, the decision to cut the CRR is a welcome move that benefits borrowers. CRR represents the percentage of a bank’s total deposits that must be maintained as reserves with the RBI in cash form, ensuring liquidity and stability in the banking system. A higher CRR means less money available for banks to lend, reducing liquidity, whereas a lower CRR increases lending capacity and boosts liquidity.
By reducing the CRR from 4.5% to 4%, the RBI has freed up additional funds in the banking system, enabling banks to lend more. This move is expected to result in lower lending rates, making home and personal loans more affordable for borrowers. Reduced borrowing costs can lighten Equated Monthly Installments (EMIs), encourage credit uptake, and stimulate sectors such as housing and small businesses, thereby supporting economic growth while easing financial burdens on borrowers.”
Mr. Sahil Agarwal, CBO, Nimbus Projects Limited
“In a welcome development for borrowers, the RBI’s latest monetary policy brings good news. While the central bank kept the repo rate unchanged, it decided to reduce the Cash Reserve Ratio (CRR) that banks must maintain. This move will free up more funds for banks to lend.
With more liquidity available, we anticipate that banks may pass on some of the benefits to borrowers through lower interest rates. A reduction in interest rates will particularly benefit high-ticket borrowers, such as those taking home loans, by reducing EMIs. We believe this shift could prompt home buyers who have been waiting on the sidelines to finally make their purchase decisions.”
Dr. Nitesh Kumar, MD & CEO of Emami Realty
“The RBI’s latest monetary policy announcement. He acknowledged the RBI’s decision to keep the repo rate unchanged at 6.5% was expected, but the cut in the Cash Reserve Ratio (CRR) to 4% is seen as a positive move to improve liquidity in the banking system. Kumar emphasized that while a reduction in the repo rate would have been more beneficial for the real estate sector by lowering borrowing costs, the CRR cut is still a positive move. It will improve liquidity in the banking system, which can indirectly support the housing market by making more funds available for lending This is particularly beneficial for the affordable and mid-segment housing markets, which are highly sensitive to interest rate changes. However, the revision of the GDP growth outlook for FY25 down to 6.6% has raised some concerns but the sector remains hopeful that the improved liquidity and stable interest rates will support steady growth.”
Mr. Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited
The recent RBI’s monetary policy is indeed a Great step to further encourage the Bullish Indian markets in all segments . While the central bank kept the repo rate unchanged, it decided to reduce the Cash Reserve Ratio (CRR) that banks are required to maintain. This move will free up additional funds for banks, enabling increased lending to both retail and institutional borrowers.
A lower CRR also reduces banks’ costs, potentially leading to a decrease in interest rates. The housing market, particularly the luxury segment, continues to exhibit strong demand, and this reduction in CRR is expected to further boost momentum. With a growing economy and a rising preference for luxury real estate projects, demand in this segment is likely to remain robust.”
Cover image-the telegraph india
