Real estate developers' body CREDAI has written to the RBI, saying that the banks have not adequately passed on the benefits of repo rate cuts to the NBFCs and housing finance companies (HFCs) and retail borrowers, thereby not allowing the real estate sector leverage the benefits of the rate cut.
The industry body has sought "urgent and immediate" intervention from the Reserve Bank of India in the matter.
"The real estate sector, however, is not able to leverage the benefits of this reduction in repo rates. The major restricting factor is that while the above-mentioned circular directs the banks to link the floating rates on housing loans to external benchmarks, the same is not made applicable to NBFCs and HFCs," it said.
In its letter dated May 26, the Confederation of Real Estate Developers' Associations of India (CREDAI) also said that while the RBI has reduced 2.50 per cent in repo rates since January 2019, the maximum reduction passed on by banks to the borrowers has been between 0.7-1.3 per cent, largely from August 2019 till date.
In some cases, no benefit of repo rate reduction has been passed on at all, as per the industry body.
Noting that non-banking finance companies (NBFC) and HFCs are the major source of financing to the real estate sector, and they are not being able to avail lower interest rates, the letter to the central bank said, "the industry is getting access to finance at much higher rates".
It sought that "appropriate directions be given to the banks to pass on the benefit of the rate cuts to NBFCs/HFCs to enable them to lend to the real estate sector at a lower rate of interest."
( With inputs from IANS )