CREDAI seeks 100 basis point cut in policy rates

The Confederation of Real Estate Developer's Associations of India (CREDAI) today demanded that the Reserve Bank of India (RBI) should cut the key policy rates by at least 100 basis points to improve liquidity position in the system and boost business sentiments.

Reacting to RBI's decision to keep the key policy rates unchanged, CREDAI Chairman Pradeep Jain said: "The RBI needs to bring confidence into economy and it should cut repo and reverse repo rates by at least 100 basis points to create liquidity and for support of the entire industry."

Pointing out that business sentiments at the moment were very low, Jain said the central bank should take steps to improve it.

"Inflation can only be controlled by improving supply and not curtailing demand," he observed.

In its mid-quarter review of monetary policy, the central bank maintained repo (rate at which banks borrow from RBI) at 8.5%, reverse repo (rate at which the RBI borrows from banks) at 7.5%. The halt in rate increase comes after 13 hikes since March 2010.

The interest outgo of realty firms, which are sitting on a huge debt, have gone up significantly due to increase in cost of funds following subsequent rate hike since March last year.