Indian companies said the central bank measures won't revive consumer sentiment and also not encourage companies to revive expansion plans that have been put on hold.
Most felt that it would take time for the impact to percolate to industry as banks were reluctant to immediately pass on the benefit. Moreover, the volatility in the stock and credit market is expected to stabilise only after a couple of months.
"It was not viable to make any major investment till interest rates headed the right way. There should be an interest rate cut of at least two per cent," said Neeraj Singal, managing director, Bhushan Steel.
The company had pushed back some of its projects by 6-9 months owing to difficult market conditions.
The Reserve Bank of India on Sunday cut its benchmark repurchase rate, cash reserve ratio and also reduced the banks requirement to maintain statutory liquidity ratio to free more money for lending.
This move follows the central bank's earlier measure of cutting CRR, repo rate and allowing banks to borrow money against securities.
"The steps are woefully inadequate. You are selling dollars and sucking out liquidity. As a result, call rates have shot up to 20 per cent. If the objective is to create confidence, you are unable
to do so," said Ajit Gulabchand, CEO, HCC.
Realtors said lenders have failed to relax funding to home buyers and property developers even after the earlier measures were announced.
The main reason being that real estate funding was seen as a high risk proposition.
"There is no positive impact of the earlier RBI measures. Banks should cut home loan rates and lending rates to developers to revive property sales,'' said Pradeep Jain, chairman, Parsvnath Developers.
Realtors have been demanding bank funding for land. Commercial banks have stopped lending to developers after the global liquidity crunch hit them in terms of higher interest rates and unavailability of funds. Some developers reportedly have been borrowing funds at around 25-35 per cent to stay afloat.
Property sales have plunged by more than 30 per cent from the beginning of the year due to high interest rates and rise in monthly loan pay-outs by home loan borrowers, limiting cash flows to developers and their execution capabilities.
"The realty sector is troubled from the fact that the banks are reluctant to lend to developers. Unless liquidity is made available to developers, such measures will not help the sector," said Rajeev Talwar, executive director, DLF.