Imminent rate cuts by banks looks a real possibility now that Governor Rajan has made it clear that the cost of funds for banks have fallen substantially.
As usual banks have been rather reluctant to pass on the rate cuts to the end consumer in spite of couple of rate cuts by the RBI this calendar year. However, it is just a matter of time before banks are forced to pass on the rate cuts. Thousands of borrowers are patiently waiting for reduction in their monthly EMIs. Even corporate India has been very vocal on the impending rate cuts by the banks. On the ground economic activity will get a leg up when the borrowing costs comes down. Improved economic activity will result in higher income and will eventually boost the disposable income of the people.
Real Estate space should be one of the biggest beneficiary as and when the rate cut trickles down the system.
Now that the Governor himself has made his stand loud and clear, banks will have no option but fall in line by cutting lending rates, sooner rather than later.