CRR cut may benefit industry: Sobha Developers

The Reserve Bank of India cut cash reserve ratio (CRR) by 25bps to 4.25% in its second quarter monetary policy review. JC Sharma, Vice Chairman & MD of Sobha Developers said although, a repo rate cut would have been welcome, a CRR cut will eventually benefit the industry. He further added that the RBI is signaling a cautious stance on a turbulent global environment. Sharma feels interest rates have to come down for liquidity improvement and developers were waiting for it to happen. 

Here is the edited transcript of the interview on CNBC-TV18.

Q: Are you going to see any impact on the demand for homes, do you think it is going to taper off because this expected falling of the EMIs is not going to happen?

A: I do not believe that. The developers were looking for improvement in liquidity as well as deduction in interest rates. We find now that banks are lending money to the developers. As far as the home loans buyers are concerned, we find that all the banks, public sector banks as well as private sector banks and HDFCs are competing with each other and reducing the rate of interest.

While rate cut would have been welcomed, this ageing of CRR and also the aggressive stance which banks are taking vis-à-vis the home loan buyer will not have any adverse impact, rather it will benefit the industry.

Q: Would consumers now be willing to buy more considering that consumers are not going to get perhaps lower rates?

A: Consumers are indeed getting lower rates. From last year to this year, from 12 percent interest they are now getting loans between 10 percent and 10.5 percent. Despite the central bank not reducing interest rate, today consumers are reaping the benefits.