"RBI's move is a positive step but it may not help much as banks are still struggling with loans given to developers. Nonetheless, faith and trust will return to the industry,'' said Ramesh Jogani, managing director of Indiareit Fund Advisors, a real estate fund manager of Ajay Piramal group.

Akshaya Kumar of Park Lane Property Advisors adds: "Some amount of liquidity will come to the industry in the next couple of months but mostly to big players. I do not think interest rates of commercial developers will ease now," Kumar said.

Apart from bank funds, almost all sources of funds such as external commercial borrowings (ECBs), capital markets and most importantly, property market have dried up in the last year. Due to high interest rates and monthly loan pay-outs, property transactions have halved from the beginning of this year, limiting their cash flows of developers and their execution abilities.

Bankers also say home rates may not dip further as lending rates are close to deposit rates. Currently, deposit rates are around 10.5 per cent.

"We have been evaluating the impact of lower provisioning norms, but there is no scope for further relaxation in the interest rates on home loans. However, it would encourage us to raise our lending activities in the sector," said a senior official at a mid-size public-sector bank.

However, property developers expect banks to ease lending and cut rates after the RBI's move. "There is liquidity in the system but it has to come out. It all depends on whether bankers are ready to lend to property companies," said Sarang Wadhawan, managing director of Mumbai based developer HDIL.

Stocks of most realty firms ended in the red on Monday as the BSE Realty Index closed 5.17 per cent down from Friday's closing. DLF, the country's largest property developer lost 4 per cent whie HDIL stock was down 4.56 per cent, Indiabulls Real Estate was down 7.54 per cent.