In India, Banks’ lending to the commercial real estate sector grew 11.6% in February, 2012 from a year earlier as risk averse fund houses continued to seek a higher rate of return and invest in smaller deals.
According to the RBI (Reserve Bank of India) data, banks sanctioned nearly Rs. 1.20 lakh crore in loans to the sector in February 2012 against Rs. 1.10 lakh crore in February 2011. The year-on-year growth in January was 12.1%.
Banks normally charge an interest of 14% to 16% compared with 20% to 22% or higher sought by fund houses, making them attractive for builders/promoters/ developers seeking funds for project completion and to meet working capital requirement.
Bank credit to the sector has remained high despite the RBI cautioning that banks must lend only to projects where necessary approvals have been obtained. SBI’s exposure to the sector at the end of December 2011 was nearly Rs. 1,05,000 crore. Of this, about 10% was in commercial real estate.
According to the RBI (Reserve Bank of India) data, banks sanctioned nearly Rs. 1.20 lakh crore in loans to the sector in February 2012 against Rs. 1.10 lakh crore in February 2011. The year-on-year growth in January was 12.1%.
Banks normally charge an interest of 14% to 16% compared with 20% to 22% or higher sought by fund houses, making them attractive for builders/promoters/ developers seeking funds for project completion and to meet working capital requirement.
Bank credit to the sector has remained high despite the RBI cautioning that banks must lend only to projects where necessary approvals have been obtained. SBI’s exposure to the sector at the end of December 2011 was nearly Rs. 1,05,000 crore. Of this, about 10% was in commercial real estate.
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