Home >> Media-TV >> Article

RBI’s interest rate cut augurs well for ad spends

30-January-2013
Font Size   16
RBI’s interest rate cut augurs well for ad spends

The Reserve Bank of India on Tuesday announced that it would be slashing its key interest rates by 0.25 per cent. It has also released Rs 18,000 crore additional liquidity in the system to perk up growth through reduced cost of borrowing.

The interest rate cut comes after a period of nine months, with the last changes done on April 17, 2012.

RBI Governor D Subbarao, in the third quarter monetary policy review, cut the repo rate, which is also referred to as the key short-term lending rate, by 0.25 per cent; hence, the rate earlier which was 8 per cent has been cut to 7.75 per cent and Cash Reserve Ratio (CRR) by similar margin to four per cent.

While repo rate cut will reduce the cost of borrowing for individuals and corporates, the reduction in CRR, which is the portion of deposits that banks have to park with RBI, would improve the availability of funds.

Implications
2012 was a slow year in terms of economic growth, owing to poor economic conditions as well as high interest rates that were levied. The last year had observed the real estate developers heavily indebted due to the slowdown of the economy. With the proposed slash in the interest rate, the year 2013 has certainly started on a comparatively positive note.

According to the industry sources, there are certain significant changes that might be observed in certain sectors of the industry. The first and foremost is the effect on home loans and car loans which are expected to get cheaper in the coming months. With the decrease in the interest rates, more number of individuals would be interested in applying for the loans since there would be a reduction in the cost of borrowing. This will in turn lead to an increased buying of homes and cars altogether giving a push to the real estate and the automobile sector.

According to Kamal Khetan, CMD, Sunteck Realty, the repo rate cut and reverse repo rate cut from RBI, each at 25 basis points, is an early indicator for a softening stance in the coming months and this shall definitely boost the sentiment of all stakeholders in the economy. The rate cut will also bring in the required liquidity in the markets and this is expected to boost the real estate sector.

Commenting on the projections, Rajeeb Dash, Senior Manager, Marketing services, Tata Housing stated, “This would indeed be a positive move for the realty sector in a large way. There would a definite increase in the sentiments which would bring up the performance of real estate. Owing to various uncertainties in the market, sentiments were cautious but this would hopefully change a lot of things.”

Khetan also believes that if the banks reduce the home loan rates by 25 to 50 bps, it will provide further impetus to customer confidence and incentivise fence sitters in decision-making.

What would it mean for the advertising industry?
With the reduced costs of borrowing and the increase in the number of individuals buying property, cars, etc., both the realty and the automobile sector is bound to see an increase in their revenue. This in turn will affect the advertising industry, which was also witnessing a slow year. The projected revenue for the realty sector will imply a growth in ad spends on various media platforms.

Elaborating on the same, Khetan stated, “From a developer’s perspective, there would be savings on interest expenditure on the loans and debt in the balance sheet. Furthermore, if home loan rates witness reduction, it can lead to higher sales of the inventory. This in turn shall encourage developers to plan new launches and sustenance campaigns via innovative marketing for the existing projects to ensure inventory liquidation.”

According to Dash, the current move would certainly result in a lot on new innovations on the marketing and advertising front as well in terms of different promotional activities.

Khetan believes that apart from real estate, the allied industries – infrastructure and automobile are likely to benefit the most. Capital markets and equity investments too would benefit as there would be reduction in the FD/ savings rate, which would attract investors towards equity investments.

Kartikeya Sharma says that June has been the best month for sales in the 11 years that the brand has been in India

The newly appointed CEO of ZEE5 on how he aims to have the widest appeal in the OTT space amongst Indian consumers

The VP, Marketing and Communications (South Asia), talks about the company's growth strategy, its focus areas, impact of demonetisation on consumer behaviour and much more

Siju Prabhakaran, South Cluster Head, Zee Entertainment Enterprises Limited, talks about channel's rebranding, extending fiction shows to weekends and much more

right
left
DISTINGUISHED JURY COMES TOGETHER TO PICK WINNERS FOR PITCH’S TOP 50 BRANDS PITCH CMO SUMMIT BANGALORE SEES TOP CMOS ACROSS INDUSTRIES IN ATTENDANCE 1ST REPUBLIC TV GULF INDIAN LEADERSHIP SUMMIT & AWARDS HONOUR STALWARTS OF INDIAN GULF BUSINESS COMMUNITY SONY YAY! CELEBRATES ITS FIRST BIRTHDAY WITH PARTY FOR TRADE PARTNERS THOUGHT LEADERS AND TOP DIGITAL MARKETERS SPEAK @ EXCHANGE4MEDIA GROUP’S TECHMANCH 2018 IN MUMBAI EXCHANGE4MEDIA’S IDMA 2018 RECOGNIZES INDUSTRY’S BEST DIGITAL MARKETING CAMPAIGNS REALTY PLUS UNVEILS COFFEE TABLE BOOK AT 10TH CONCLAVE & EXCELLENCE AWARDS @AHMEDABAD EMINENT JURY CONGREGATES TO PICK WINNERS OF INDIAN DIGITAL MARKETING AWARDS 2018 OFF THE CUFF SEES ‘SWACHH BHARAT ABHIYAN’ MAN PARAMESWARAN IYER IN CONVERSATION WITH SHEKHAR GUPTA EXCHANGE4MEDIA’S LOUDEST.IN HOSTS INAUGURAL EDITION OF MUSIC INC. IN MUMBAI EMINENT JURY CONGREGATES TO PICK IMPACT’S 40UNDERFORTY ACHIEVERS PORTER PRIZE & INSTITUTE FOR COMPETITIVENESS RECOGNIZE STRATEGIC ACUMEN IN COMPANIES DELHI AD CLUB-SAARC AWARDS 2018 RECOGNIZE EXCELLENCE ACROSS CREATIVE, MEDIA & DIGITAL AGENCIES BSNL & CALL2ACTION COMMUNICATION INDIA LAUNCH MOBILE ADVERTISING PLATFORM, INFOMO IN NEW DELHI CHILDREN’S RIGHTS ACTIVIST KAILASH SATYARTHI LAUNCHES BOOK ‘EVERY CHILD MATTERS’ SENIOR JOURNALIST VIJAY TRIVEDI LAUNCHES BOOK ‘YADA YADA HI YOGI’ BASED ON YOGI ADITYANATH EMINENT JURY CONGREGATES TO PICK IMPACT’S 40UNDERFORTY ACHIEVERS PORTER PRIZE & INSTITUTE FOR COMPETITIVENESS RECOGNIZE STRATEGIC ACUMEN IN COMPANIES DELHI AD CLUB-SAARC AWARDS 2018 RECOGNIZE EXCELLENCE ACROSS CREATIVE, MEDIA & DIGITAL AGENCIES MARK TULLY, OTHER JOURNALISTS HONOURED BY MUMBAI PRESS CLUB AT ANNUAL REDINK AWARDS

Colors Kannada, Asianet, SUN TV and Star Maa retained the lead positions in their respective markets, according to the Week 27 data released by BARC.

The campaign establishes an emotional connect with JSW Cement’s eco-friendly cement promising longevity and durability of a home

Your weekly news roundup, a summary of some of the stories to keep an eye on