MUMBAI 07 JUNE 2017: The six-member Monetary Policy Committee (MPC) headed by Reserve Bank (RBI) Governor Urjit Patel which met on June 6 and 7 for the Second Bi-monthly Monetary Policy Statement for 2017-18,reduced the standard assets provisions on individual housing loans to 0.25 per cent and also lowered the risk weights on such lending. “The RBI move, which reduces provisions and risk weights will make home loans cheaper,” said Dr Niranjan Hiranandani, CMD, Hiranandani Communities.
During the previous monetary review in April, the RBI had maintained status quo as regards rates. Despite that, banks have recently reduced interest rates on home loans. “In line with these reductions, the move on part of the RBI, reducing asset provisions and lowering risk weights – as Governor Urjit Patel mentioned – is a part of the RBI and the Indian Government’s attempts of ‘targeted interventions’ which should help boost growth numbers. It is a positive move,” said Dr Niranjan Hiranandani.
The standard asset provisions, or the amount of money to be set aside for every loan made, has been lowered to 0.25 per cent from the earlier 0.40 per cent, which will help reduce the interest rates on home loans. “The RBI also eased the risk weights for certain categories of loans, which will help banks on the capital adequacy front, and enable them to give more home loans,” he added.
From the perspective of the real estate industry, Dr Niranjan Hiranandani said any rate cut by the RBI would obviously, have boosted sentiment and had a positive effect on sales of residential real estate. “That being said, the RBI maintained a ‘status quo’ during the monetary policy review, but it has relaxed the loan to value ratio, standard asset provisioning and risk weight for individual housing loans,” said Dr Niranjan Hiranandani.
“Those looking to buy a home for end-use should make the most of the RBI move and opt for a home loan. With banks and HFIs reducing home loan interest rates, and the RBI in turn reducing provisions, risk weights – effectively, making home loans even more affordable, it would be the right time,” concluded Dr Niranjan Hiranandani.
~ Dr Niranjan Hiranandani is Founder & CMD, Hiranandani Group. His recent initiative is Hiranandani Communities. He is also Founder and First President, National Real Estate Development Council (NAREDCO-WEST), which works under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India.
It is Amma 2.0 in Tamil Nadu with Jayalalithaa retaining power for a second term. Hopes are high that the government this time around, will finally focus on completing long-delayed infrastructure projects that are crucial to Chennai’s real estate sector. So which are some of the projects that the government should look at first? Here are the top 5 picks.
1) The Chennai Metro
The Chennai metro rail connecting Nehru Park to Thirumangalam, Little Mount to Airport and Alandur to St Thomas Mount is supposed to be completed by the end of the year. Once this is done, travelling to the airport from Kilpauk and Anna Nagar will become hassle-free. The government should focus on completing this first, and then follow it up by completing the 9-kilometer Phase 1 extension from Washermanpet to Wimco Nagar, in order to enhance connectivity within North Chennai.
2) 6-lane Vandalur flyover
The junction at Grand Southern Trunk road (GST) and Vandalur-Kelambakkam Road is a bottleneck for both local traffic and vehicles coming in from the southern districts. The government has plans to build a multi-lane flyover can here and should focus on getting this completed at the soonest. This will help decongest traffic and boost residential pockets in Urapakkam, Guduvanchery and Potheri.
3) Porur Flyover
This is the answer to the perennially congested junction at Mt Poonamallee and Arcot Salai. This key link flyover can provide quick access to the city for those who are working in nearby IT firms like TCG IT Park, Jayanth Tech Park and DLF IT Park. But work on the flyover has been slow and the government should take this project up on a war footing. Once the flyover is completed, pockets in West Chennai such as Porur, Maduravoyal and Mount Poonamallee are expected to see a boost in demand for homes.
4) Madhya Kailash-Siruseri Flyover
Crossing the Tidel Park junction and heading to the IT corridor on OMR has turned into a nightmarish commute for people in Chennai, thanks to the sheer amount of traffic in the region. The government should focus on building a flyover between Madhya Kailash and Siruseri. This will help decongest traffic and give a boost to the housing markets of Shollinganallur, Perungudi and the Pallavaram – Thoraipakkam Radial Road.
5) Upgrade Existing Roads
A month before the elections, local authorities did a shoddy job of paving existing roads, covering storm-water drains and flouting all norms. The older bitumen layers from the roads were not scraped off and as a result, these roads have grown taller by several inches and were uneven in places. The monsoon season is almost upon us and the government needs to buck up and immediately upgrade arterial roads in the city especially in those pockets which saw the worst of the disastrous December floods.