ASSOCHAM Welcomes RBIís Monetary Policy
Wednesday, November 03, 2010
ASSOCHAM Welcomes RBIís Monetary Policy

New Delhi: The increase in repo as well as reverse repo rates by 25 basis points and CRR remaining unchanged at 6 percent in the Monetary Policy is on the expected lines of the industry, said Dr. Swati Piramal, ASSOCHAM President.

ASSOCHAM, in view of the prevailing economic conditions, appreciates the RBIís balanced move. The monetary stance that has been adopted since the beginning of the recovery process has been resulting in varied impacts.

One specific element of the announced policy i.e., ceiling on the Loan To Value (LTV) in housing loans, which should not exceed 80%. In addition it has also increase the risk weight on residential housing loans of 75 lakhs and above irrespective of LTV ratio to 125 percent as against 100 percent at present.  This will continue to boost housing for the masses but put a check on the higher ticket real estate activities. Thus there would be shift in the direction of focus of the real estate sector. This has been very much required to maintain higher capital, said Dr. Swati Piramal, President ASSOCHAM.

However, on the other side, the central bank has also increased the standard asset provisioning by commercial banks on teaser rates for housing loans to 2%. It is likely to increase both lending as well as deposit rates of banks immediately observed Dr. Piramal.

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