- The RBI’s 50 bps rate cut marks a strong and proactive stance aimed at lifting the low and mid value housing segments
- It is vital to reviving demand and unlocking new investment cycles
- Sectors that are rate-sensitive—such as real estate, automobiles, and consumer durables—are expected to benefit first from the easing
NE BUSINESS BUREAU
AHMEDABAD, MUMBAI, NEW DELHI, CHENNAI, JUNE 9
The Monetary Policy Committee under the chairmanship of Sanjay Malhotra, Governor, Reserve Bank of India on Friday voted to reduce the policy repo rate by 50 basis points to 5.50% with immediate effect.
Consequently, the standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) shall stand adjusted to 5.25% and the marginal standing facility (MSF) rate and the Bank Rate to 5.75%.
The policy decisions have received widespread endorsement from industry leaders, who see them as vital to reviving demand and unlocking new investment cycles. Sectors that are rate-sensitive—such as real estate, automobiles, and consumer durables—are expected to benefit first from the easing. The broader retail credit ecosystem, including MSMEs and fintech-led platforms, is also expected to gain from lower cost of funds.
For the real estate sector, this rate reduction is set to bolster credit lending, accelerate buying velocity, and enhance development momentum. The resulting decline in home loan interest rates will directly benefit homebuyers by improving affordability and cushioning their financial commitments.
Here are the reactions from industry captains.
Sakshi Gupta, Principal Economist, HDFC Bank: “The RBI delivered a surprise monetary bonanza today. The frontloading of the 50bps rate cut along with the 100bps cut in the CRR reflects the central bank’s endeavour to do what it takes in order to spur aggregate demand in the face of global headwinds. The RBI kept its growth forecast unchanged at 6.5% while reducing its inflation forecast to 3.7% for the year. Today’s decision should help accelerate the decline in borrowing costs for households and help support credit demand in the economy.
That said, looking ahead, the change in stance to neutral from accommodative perhaps indicates that the RBI could now go on pause for the foreseeable future. The central bank is likely to turn data dependent, and any further rate cut could come in only if growth surprises on the downside materially. It is likely that we see no further rate cuts in the repo rate for 2025 now.”
Binod Kumar, MD and CEO of Indian Bank: “The RBI’s decision to cut the repo rate by 50 basis points to 5.50% while changing its stance to neutral will boost credit demand in sectors like Retail, Agriculture and MSME. It will also encourage private capex. CRR cut will provide liquidity at the hands of banks. RBI is taking very proactive steps keeping in view looming headwinds on credit growth. Lower rates will spur the retail demand especially for affordable housing. Good monsoon coupled with lower rates augurs well for agriculture sector. It will drive consumption and will boost rural demand. MSMEs, which are vital to India’s economy, will see improved cash flow and more room to grow. We will ensure to pass on rate transmission immediately to support entrepreneurs and keep the economy moving forward.
Shekhar Patel, MD & CEO, Ganesh Housing Corporation Ltd.: “The RBI’s latest rate cut will have a meaningful impact across the real estate sector. While the lower borrowing costs are set to boost buyer sentiment, accelerate residential sales, and make housing finance more accessible for homebuyers, on the other hand, reduced corporate borrowing costs will further encourage business expansion and new market entries. Lower interest rates make office space acquisitions and warehouse investments more attractive, while improved cash flows enable companies to upgrade their facilities. This is expected to drive demand for Grade A office spaces, industrial parks, and retail developments, especially in emerging business districts.
We see this policy momentum providing a solid foundation for sustained investments in urban development and infrastructure. At Ganesh Housing, we remain optimistic about the sector’s outlook and are committed to delivering dynamic spaces that support India’s growth and evolving community needs.”
Anuj Puri, Chairman – ANAROCK Group: “As widely anticipated, the RBI decided to reduce the repo rates by 50 bps (to 5.5%) to the backdrop of moderating inflation in the country. This is the third consecutive time this year that the apex bank has cut the repo rates. This effectively lowers the cost of borrowing, making home loan EMIs easier on the pocket and thereby directly improving affordability for buyers. This can potentially boost demand in the Indian real estate sector, especially in affordable and mid-income segments. Affordable housing faced the sharpest pandemic fallout, with sales and new launches shrinking in the top 7 cities.”
Ajay Kumar Srivastava, MD & CEO, Indian Overseas Bank: “The RBI’s decision to reduce repo rate by 50 basis points to 5.50% and CRR by 100 basis points in four tranches indicates a strong and timely policy shift that aligns with balancing growth with price stability. Besides this, the revision in CPI inflation to 3.7% for FY26 also shows RBI’s confidence in inflation being aligned with its 4% target. The decision in CRR cut which is expected to release INR 2.5 lakh crore in primary liquidity, will ease credit conditions in the banking system. This overall policy reflects a well calibrated and thoughtful approach with the GDP projected at 6.5% in FY26 and a steady quarterly trend. The pickup in non-gold imports and 14% increase in gross FDI also indicate robust domestic demand and global investor confidence in India’s structural strength. We believe this policy decision is expected to provide the necessary drive for credit expansion in priority sectors which will fasten the inclusion economic growth.”
Tribhuwan Adhikari, MD and CEO of LIC Housing Finance: “The 50-bps rate cut is a bold move by the RBI. A total of 100 bps rate cuts in quick succession since February 2025 signals a strong push towards accelerating economic momentum while keeping inflation well within manageable levels. These progressive steps along with the inflation easing and the growth forecast remaining steady at 6.5%, the rate cut is expected to significantly lower borrowing costs, thereby improving affordability for homebuyers across segments. The monetary policy is becoming more balanced and forward-looking.”
Niranjan Hiranandani, Chairman, NAREDCO & Hiranandani Group: “The RBI’s proactive measures, including slashing the repo rate by 50 basis points to 5.50% and reducing the CRR by 100 basis points, mark a pivotal intervention to bolster India’s GDP growth amidst a fragile global economic environment. The liquidity infusion of Rs 2.5 lakh crores is set to drive capex expansion, stimulate demand, and catalyze growth across sectors. With a focus on leveraging India’s demographic dividend and accelerating digitalization, these steps underscore the RBI’s commitment to sustaining growth forecasts while reinforcing India’s position as a key pillar in the global economic landscape.”
