“Raghuram Rajan keeps policy rates unchanged in his last review as RBI Governor, as expected,”: Niranjan Hiranandani

MUMBAI, 09 AUGUST, 2016: The third bi-monthly policy review of 2016-17 was conducted by Reserve Bank of India Governor Raghuram Rajan on 9 August 2016. As expected, he kept the policy rates unchanged.

During the RBI monetary policy review, perhaps, the last that a RBI Governor undertook independently, the RBI Governor noted three ‘positives’ – first, Kharif sowing has gathered pace; secondly he noted signs of improvement in business confidence, and thirdly, he said that liquidity conditions have eased and yields on government bond have dropped.

“Indications were that the RBI Governor, despite the expected Monsoon rains having actually covered the drought-like situation facing the country, would bring in no changes this time around,” said Niranjan Hiranandani, MD, Hiranandani Communities and Founder-President National Real Estate Development Council (NAREDCO – Maharashtra). His stance of inflation remained the same, and he conducted his last policy review with a  ‘status quo’, he added.

The last rate cut announced by the RBI Governor was in April this year, when he had cut the repo rate by 25 bps to 6.50 per cent. Niranjan Hiranandani said that a rate cut at this point of time would definitely have helped reduce the overall burden for home buyers; and this would have potentially, boosted residential real estate sales. “The Monsoon has made a positive start, but food-driven inflation has been an issue which the RBI Governor mentioned in his review as ‘an area of concern’. Brexit was also a factor, since it has increased volatility in global financial markets,” he added.

One aspect which will remain ‘unfinished’ is about financial institutions and banks passing the entire benefit of existing rate reductions to the end customer. “The last time the RBI Governor cut key rates in April, he had expressed hope that banks would pass on the reduction to customers – he did not seem happy with the manner in which banks have done this,” added Niranjan Hiranandani. “Over the past few months, this has translated into a ‘wait and watch’ situation, with the RBI Governor waiting for banks and financial institutions to further transmit the rate reduction to end users. In his last review too, he did not seem happy with this aspect,” said Niranjan Hiranandani. From an over-all real estate perspective, things are looking better, said Niranjan Hiranandani, adding that he expects 2016 to usher in a time for good news in real estate.

“The good news in real estate is that demand for commercial and office spaces which started picking up in second half of 2015 has continued its growth story through 2016. My Group companies have on-going commercial real estate projects in GIFT City in Ahmedabad, Hiranandani Estate, Thane; and Hiranandani Fortune City in Panvel; and we are handling serious enquiries, most of which are on way to being formalized into actual deals.  I look at these positives, and have reason to believe that the momentum these will provide will also help elevate demand for residential real estate in the vicinity of those commercial properties,” he concluded.


~ Niranjan Hiranandani is Founder & MD, Hiranandani Group, his recent initiative is Hiranandani Communities. He is the Founder and First President (Maharashtra), National Real Estate Development Council (NAREDCO), which works under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India.


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