"The real estate sector, however, is not able to leverage the benefits of this reduction in repo rates," the Confederation of Real Estate Developers' Associations of India (CREDAI) said.
RBI has directed the banks
to link floating rates on housing loans to external benchmarks, but the same is not made applicable to NBFCs and HFCs, it added.
"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, however, no benefit of repo rate reduction has been passed on at all," CREDAI said in the letter.
Stating that NBFCs and HFCs are the major financing source for the real estate sector, the industry body said that because of these impediments, the industry is getting access to finance
at much higher rates.
CREDAI said RBI should issue appropriate directions to banks to pass on the benefits of rate cuts
to NBFCs/HFCs to enable them to lend to the real estate sector at a lower rate of interest.
Earlier this week, CREDAI also wrote a letter to Prime Minister Narendra Modi, recommending seven measures for survival of the industry during the coronavirus
The real estate sector is facing a multi-year demand slowdown and has huge unsold inventories. The stress has exacerbated due to the coronavirus
pandemic. The sector got a breather from the over Rs 20 trillion economic package announced by Centre in the form of extension of interest subsidy scheme till March 2021, and 6 months extension for completion of existing projects.
However, the industry body has said that this is not enough and more needs to be done to boost demand.