Lower rates can boost housing: Rajeev Talwar

Banks should bring down their lending rates significantly

The Reserve Bank of India (RBI) was expected to cut rates after the government stuck to the fiscal consolidation road map in the Budget. The expectations were met on Tuesday. As inflation has been broadly trending downwards and is expected to ease further, while growth recovery remains patchy, a 50-basis point (bp) rate cut was perhaps warranted to boost consumer confidence and push investment demand. RBI is, perhaps, banking on recent steps to supplement the 25-bp rate cut to pull down overall interest rates and achieve the impact of a 50-bp cut. While the repo rate cut will have a direct bearing on the interest rate structure, a series of structural changes, including cuts in small savings rate, a marginal cost of funds-based lending rate, and reduction in minimum daily maintenance of the cash reserve ratio will also lead to better transmission of current and previous rate cuts. We are hopeful banks will bring down their lending rates significantly. Lower lending rates with the government's Budget push to the housing sector, is expected to give a much-needed fillip to demand in the sector.

Rajeev Talwar
Chief executive officer, DLF