NO CHANGE IN THE PRE-GST REVIEW BY RBI

With the biggest tax reform in the country to be implemented from the first day of the next month,
todays bi-monthly monetary review came out with no surprises as Indias central bank governor Dr. Urjit
Patel kept the key rates unchanged in its second policy review for the FY 2017-18. With the apex bank
currently holding excess liquidity and the economy unable to tackle the growth slowdown, keeping the rates
unchanged was a balanced and cautious move, also keeping in mind the implementation of the Goods and
Services Tax (GST) from 1st of July.

With todays decision in the monetary review, Repo rate remains unchanged at 6.25 percent, Reverse
Repo rate at 6 percent, Marginal Standing Facility (MSF) at 6.50 percent and Cash Reserve Ratio (CRR) at
4 percent respectively. Although, the Statutory Liquidity Ratio (SLR) has been brought down by 50 basis
points to 20 percent from 20.5 percent previously, which will take effect from the fortnight beginning 24th
June. In the post demonetised era, RERA implemented across the country with majority states still to follow
suit and GST to come up next; residential demand and prices are expected to make an upward movement.
Realty experts and stalwarts feel that this monetary review should have provided a rate cut as prices after
RERA and GST are projected to go up.

Industry Reacts:

Avneesh Sood, Director, Eros Group

Looking at the market dynamics, we were projecting the RBI to maintain the status quo as it is currently
holding high liquidity and a historic tax reform in the form of GST is in the pipeline. A balanced move today
will allow the market to absorb the upcoming impacts from GST on various industries and sectors. The next
policy review might allow the RBI to cut repo rate, the benefit of which might be passed on by the banks in
the near future.

Manoj Chaudhary, MD, Airwil Infra Ltd.

We were anticipating a rate cut this time which would have pushed the banks to further reduce the lending
rates. Any reduction in lending rate allows the sentiments to improve as the net cost on the buyer for the
housing unit gets decreased. With RERA and GST to have a joint impact on the realty sector, a rate cut this
time could have provided a much needed breather for the sector, its players and the buyers as well.

Dhiraj Jain, Director, Mahagun Group

Even though the RBI has not cut the repo rate today, still there is a lot of room for the banks to further
reduce the lending rates. The previous repo rate reductions by the apex bank are yet to offer the complete
results; that is held by the banks. A lending rate of 6-7 percent is ideal for our realty sector as we are
moving towards strong policy changes at the national level which will leave long term effects on the realty
sector and its allied industries.

Kushagr Ansal, Director, Ansal Housing

A rate cut of 25 bps could have helped ease the pressure off the market which has been balancing itself
through the confusion still pertaining with RERA. With GST to become operational from July, prices for
properties are expected to shoot up. During such scenarios, a slash in repo rate would have meant drop in
home loan rates by banks, which ultimately reduces the burden off the buyers. With no change today, we
expect the market to run uniformly with a static demand in the short run.
Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz

This decision of RBI to keep the rates unchanged will prove very substantial in the first quarter post GST is
implemented. Before questioning the judgement of the apex bank on holding the rates, one must not forget
that it has to keep sufficient cushion for the economy with the massive changes that will come about in the
next few months in form of REITs, InvITs, GST, and SPVs.