RBI status quo on credit policy

Need to introspect

The central bank treads cautiously by maintaining a status quo on the credit policy, says Shilpa Sachdev

Against the expectations of the market, the Reserve Bank of India kept the repo rate and the cash reserve ratio unchanged at 8% and 4.75% respectively in its recent credit policy. The real estate sector was hoping for a boost from the government in the form of some relief in the benchmark rates to ease the liquidity and fuel the sector's growth. But with the stance taken by the RBI, experts feel that the country's apex bank could have done better on monitoring the issues facing the economy.

Expressing his disappointment, Paras Gundecha, President of MCHI-CREDAI, states, "It seems the RBI is undermining the importance of the real estate sector in India's economy and GDP. The real estate sector plays a vital role in generating employment opportunities and accelerating the growth of the nation. Being the financial hub of the country, the real estate sector in Mumbai will be negatively impacted by the RBI's status quo."

Inflationary pressures and a policy logjam have impacted the momentum of the real estate sector, which was hoping for the government to announce some measures to support the sector.
According to Lalit Kumar Jain, National President, CREDAI and CMD of Kumar Urban Development Ltd (KUL), the status quo on interest rates will further dampen the sentiment though the RBI may justify its action. He says, "The RBI appears to be sadly ignorant of the importance of the real estate sector in the national economy and GDP. The capital and labour intensive sector plays a key role in employment generation and accelerating growth."

He recalled that the encouragement given to real estate in 1998 had kick-started the growth of cement and steel industries along with over 165 other industries, including transport, with no additional cost incurred by the government. Jain adds, "The risks attributed to real estate and the RBI advisories against lending to real estate have only harmed the sector and made housing costlier for consumers. I hope further policies see rate cuts positively and the conservatism does not become a lasting attitude."

Similarly, Shailesh Puranik, MD, Puranik Builders Pvt Ltd, says, “We are hopeful of some positive steps by the RBI in the future to strengthen the overall market sentiments in the real estate sector.”
 Pranab Datta, Vice-Chairman and Managing Director, Knight Frank India, says, "The May inflation data seems to have prompted the RBI to adopt a cautious approach and maintain status quo, despite all-round expectations of easing liquidity and lowering interest rates.  For the realty industry, battling sluggish conditions for quite some time, the decision means that the hostile environment will extend further and pre-empt any respite to the industry stakeholders."

The main concern for both buyers and developers is related to the inflationary trends that still persist in the economy, as their finances get impacted on a much bigger level.
Explaining his view point, Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield, shares, "From the point of the real estate sector, a further rate cut would have resulted in positively influencing the sentiments within the sector. However, reduced CRR and Repo/Reverse rate cuts do not automatically translate into reduced interest rates for mortgages, which would have pushed the sales volumes in the residential section up higher. Banks have to take into account other factors before deciding on lowering their interest rates for retail customers. For developers, in any case, financing options from the banking industry have been restricted since some time and they have had to mainly depend on other sources such as ECBs and PE investments.”

However, Dutt adds, “Our outlook for the sector remains cautious, but still positive as there are transactions still taking place at a sustainable pace and volume."

Though the RBI's decision hints towards a cautious approach, experts feel that the current situation in the economy and industry needs deeper introspection by the RBI and the Government. Chandrajit Banerjee, Director General, Confederation of Indian Industries, says, "It is quite evident that space for fiscal maneuverability is limited given the very large fiscal deficit and it is also apparent that the inflationary pressures being alluded to are results of structural problems on the supply side. It needs to be understood that with a steadily declining GDP growth, millions of livelihoods are under threat and therefore, a very inflation centric policy measure appears to have missed the bigger picture, when CII was hoping to see a coordinated action from the RBI and the Government to stem the slide in economy."

MBA specifications

A wide choice

While conventional streams of MBA continue to be in demand, offbeat streams are fast finding their way into the curriculum, says Shilpa Sachdev

Earlier if someone had to do an MBA, the choices were limited. Finance, marketing or human resources would be the only options to choose from since these were the important sectors in any organisation. However, with the growth of information technology, systems management became a key area to master and hence many schools introduced an MBA programme that offered a specialisation in computers. But with time as job opportunities multiplied more and more areas opened up requiring specialised knowledge. And today we have schools offering MBA programmes for retail, hospitality, media and so on.

For those who enjoy number crunching and math calculations, MBA in finance is the ideal choice. With the Indian economy growing and becoming more global in nature, there is an undying need for finance experts to manage the growth. Those with finance expertise can work with banks and financial institutions like the stock market and brokerage firms and different wealth and finance consulting companies in various analyst and associate capacities. It is a rewarding proposition especially for those doing a CA, ICWA or CS. All in all, an MBA in finance offers a highly challenging job environment and a very stimulating career.

If the word ‘brand’ ticks with you, marketing is the place to be. It involves putting the product in a market and making it sell. It is a complete front end activity that requires one to be in the market to gauge what works and what does not. An MBA degree in marketing will prepare you in different areas like ideating a concept, research, advertising, marketing strategies and promotions. As a part of your final projects you can expect activities like creating your own brand and marketing it to the public to give you a feel of the actual market. If brand management and sales management is what interests you, an MBA in marketing is the way ahead.

Interpersonal relations are at every level in the organisation and those in the human relations department are responsible to strike a balance. The role of a human resources person involves dealing with people at various levels in the organisation and maintaining cordial relations with one and all. The common role of an HR person includes dealing with recruitment, staffing, organisation structure, work environment, employee retention, and a host of other activities. An MBA in Human Resources will train you to deal with people, maintain calm and deal with unstructured situations at hand. If you are a people’s man, a smooth talker, someone who can negotiate well, this is your domain.

Operations management deals with taking care of the supply chain activities of an organisation starting right from areas like inventory management, vendor management and the overall sourcing activity. It mainly looks into the backend processes of the company that help achieve efficiency levels in an organisation. Since this field involves need of technical knowledge, an MBA in Operations Management will help you train better if this is your area of interest. 

With all activities increasingly getting computerised, systems management has assumed great importance in current times. The IT department of a company integrates all the systems and creates linkages. Under systems management, one has to handle the entire IT requirement of the company starting with creating, coding, updating different software, regular monitoring and maintenance of the computer systems and the server and so on.  

Different B-schools are known for their different specialisations. So once you have decided on your field of specialisation you should choose your B-school such that it is the best in your chosen field. Also, one must also decide whether one wants to pursue a one year or two year MBA. The one year course is more intensive and so it is preferably a better choice to opt for a two-year programme that allows more time and further specialisation in the second year. There is also an option of doing part-time MBA which runs over three years. 

Several universities have also started offering dual specialisations that helps the students get the knowledge of two different fields during the course tenure. Generally, one subject has to be chosen as the major and another one as the minor subject. So if you are interested in both finance and systems, you could major in finance and select systems as your minor subject. Apart from the conventional streams available, many schools are offering highly specialized subjects like retail, hospitality, media and so on as other options to choose for within dual specialisations. Many schools also offer comprehensive two year MBA programmes for the same. 

The MBA programme today is no more restricted to the conventional streams; there is an MBA programme for even a peculiar field of interest - be it arts or biosciences or pharmaceuticals or even something as niche as Islamic banking, petroleum management or even wine management. However, it is advisable that one clearly understands what subject one is most comfortable with to select the right programme for maximum effectiveness in their job run. And those with a chunk of experience on their CV can always consider an executive MBA programme to up their resume.