Banks exposure to real estate sector in India


Real estate sector in India is finally showing signs of bending knees which stubbornly held prices high in spite of consistently falling affordability for Indian consumers across all major cities in India. Regulatory and governance issues have made the going tough of property developers. 


Banks are either not lending them, until and unless they have solid track record of repayment and project execution, or charging them very high interest rates making the project nonviable  On top of that high property prices are keeping the buyers away due to which most developers are facing cash flow issues.

But the property boom of past 5 years has led to huge exposure by banks in Indian property market which is now becoming NPAs for the banks. To amplify the pain the Reserve Bank of India has turned down banks' demand for restructuring stressed real estate loans without providing for potential losses. 

Putting together top 10 banks in India has around 5,00,000 crores of exposure to real estate sector in India, a very high percentage of which could become NPA if property prices and interest rates doesn't come down and actual consumers start buying houses to live and not to invest.


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