Story by India Today Business Desk:

:: The Reserve Bank of India (RBI) has opted to maintain the repo rates unchanged at 6.5 per cent for the sixth consecutive time. 

The repo rate, which stands as the interest rate at which RBI lends to other banks, remains steady following the conclusion of the three-day RBI’s monetary policy committee meeting from February 6 to 8.

This decision is part of the RBI’s regular bi-monthly meetings aimed at determining various key financial parameters including interest rates, money supply, inflation outlook, and other macroeconomic indicators.

In the announcement of the bi-monthly monetary policy, RBI Governor Shaktikanta Das stated that the Monetary Policy Committee (MPC) has chosen to keep the repo rate unchanged at 6.5 per cent.  Continue reading

Das also highlighted the MPC’s commitment to monitoring food inflation to safeguard the benefits acquired.

Impact on loan EMIs

With the repo rate staying the same, there probably won’t be any immediate changes to loan EMIs.

The RBI’s decision to maintain the lending rate unchanged is perceived as an attempt to strike a balance between curbing inflation and supporting economic growth. 

In response to the RBI’s decision, experts in the financial sector have offered varied perspectives. 

Sonam Srivastava, Founder and Fund Manager at Wright Research, highlighted the potential positive impact on equity markets due to lower borrowing costs, while bond markets may exhibit a subdued reaction. 

“In sectors sensitive to interest rate movements, such as real estate and automobiles, the unchanged policy could offer relief by maintaining affordability for borrowers,” said Srivastava. 

Real estate sector reaction

“The Indian real estate market and the overall economy would have benefited immensely from a rate reduction,” said Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO- Maharashtra. 

Siddartha Karnani, Partner, Banking and Finance, King Stubb & Kasiva, Advocates and Attorneys, outlined the RBI’s cautious stance in prioritising inflation control over growth stimulus amid global uncertainties.

“The Monetary Policy Committee (MPC) has affirmed its commitment to withdrawing accommodation, aiming for a progressive alignment of inflation to the target while simultaneously supporting sustained economic growth,” Karnani said. 

Expert perspectives

On the other hand, industry stakeholders like Soumya Banerjee, Partner at AQUILAW, and Pradeep Aggarwal, Founder & Chairman of Signature Global (India) Ltd, underscored the importance of policy continuity for both borrowers and developers in the real estate sector.

“While no relief will be there for the home loan borrowers, in all probability there will not be any additional burden on them either on account of the lending rate being kept unchanged. Overall, this will not hurt the demand scenario for the real estate industry in general,” said Banerjee. 

“The decision allows homebuyers to make informed choices, which is expected to result in enhanced demand across all housing segments in line with the country’s overall economic progress,” said Aggarwal. 

However, despite the stability offered by the RBI’s decision, concerns remain for home loan borrowers.

Mr. Nilesh Tribhuvann, Founder & Managing Partner at White & Brief, Advocates & Solicitors, highlighted the ongoing challenges faced by borrowers in the current economic climate.

“While the consistent stance on the repo rate provides a sense of stability, it also underscores the ongoing challenges faced by borrowers in the current economic climate. Despite this decision, borrowers must remain vigilant as lenders retain the prerogative to adjust interest rates based on various internal and external factors,” Tribhuvann said.