The Reserve Bank of India (RBI) announced on Tuesday reduction in key interest rates in the fourth bi-monthly monetary policy review. Repo and reverse repo rate reduced by 50 basis points, which is higher than expected 25 basis points cut.

Now revised repo and reverse repo rate stood at 6.75% and 5.75% respectively compared with 7.25% and 6.25% earlier. On the other hand, the central bank has kept cash reserve ratio (CRR) and statutory liquidity ratio (SLR) unchanged at 4% and 21.5% respectively.

Commenting on the rate cut, Kamal Khetan, CMD, Sunteck Realty said, ''We welcome the central bank's policy move of reducing the repo rate by 50 basis points; the Governor deserves a pat on his back. At the outset, this rate cut will lead to a long and sustained improvement of the market sentiments through higher consumer spending and easy availability of loans to both consumer as well corporate."

Khetan further said, "This is great news for the real estate sector as the rate cut would also lead to a significant reduction in home loan rates thereby reducing EMIs of home buyers. Corporate would benefit as interest outgo on existing loans would reduce and also enable them to raise equity,"

"The prospects of Government divestment would also gather pace. The green signal to raising of Rupee Debt overseas is a game-changer and can create an alternate source of funding for Indian companies,'' he added.

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