Comments on RBI's Credit Policy for FY 11 - Mr. Pradeep Jain, Chairman, Parsvnath Developers Limited

"The credit policy announced by the Reserve Bank of India has been pragmatic given the state of the economy. While the increased CRR, Repo and Reverse repo rates will check any run away growth in money supply the impetus on infrastructure lending will ensure that economic growth will continue unchecked. Over all RBI policy has been balanced, strong message on inflation indicating a possible tightening of interest rates in the future but allowing infrastructure growth with measures on infrastructure bonds. Another welcoming step is a decrease in the substandard bank loan rates by 5% which now stands at 15% will help infrastructure companies to acquire more funds from banks. Also, now the banks can subscribe directly to the infrastructure bonds which will completely solve the long term funding problems faced by the companies".

"For realty sector the focus on infrastructure growth is a welcome sign. I don't' foresee any increase in interest rates on home loans in the first quarter of the current fiscal as currently there is sufficient liquidity in the market, but definitely the banks shall be raising the lending rates in the longer run. However in the near term home buyers will not find interest rate as a stumbling block in their buying decisions. While the market was expecting a 50 bps hike in the rates. Now the banks will not be in hurry to increase the interest rates from immediate effect and even if it increases it will have only a slight change. This is applicable to housing loan as well which is a relief measure for the real estate sector", Mr. Jain further added.

Source : Equity Bulls

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