Commercial Property
lending by NBFCs surged more than 50%
According to latest
Reserve Bank of India (RBI) data Home Loans given out by non - banking
financial companies (NBFCs) dipped by 25.8% between March 2012 and 2014 This
was primarily on account of regulations aimed at containing the excessive flow
of credit to the sector amid fears of asset bubbles.
Among the measures,
the RBI told the NBFCs that they should not include stamp duty, registration
& other documentation charges in the cost of the housing property they
finance so that the effectiveness of loan-to-value (LTV) norms is not diluted.
Consequently, the
housing loan exposure of NBFCs dipped from Rs. 8,816 crore to Rs. 6,548 crore
over the 2 year period.
On the other hand,
commercial property lending by NBFCs surged, with the overall exposure rising more
than 50% to Rs. 29,806 crore in March 2014 from levels seen 2 years earlier.
This was primarily
because the risk weight prescribed for commercial lending is equivalent to the
norm for residential loans in excess of Rs. 75 lakh. What’s more, there is no
stipulated loan-to-value requirement, though provisioning requirements are
slightly higher, giving a fillip to commercial lending over loans to
individuals.
There’s no cause for
worry though: the exposure of Indian NBFCs to the real estate sector is just
about 4.1% of their total assets, according to the RBI.
This marks a return
to 2011 - 12 levels, when their exposure to real estate stood at 4% of assets
and is up from the 3.6% level at the end of 2012-13 financial year.
Of the total exposure
of Rs. 59,039 crore, the bulk comprised loans to commercial properties &
developers, followed by mortgages other than individual housing loans and
commercial land and building developers.
Housing loans made up
just 11.1% per cent of the total loans & constituted less than 0.5% of
total exposure, compared to 2.1% in the case of commercial property and
developers and 1% on mortgages. Their investments in real estate amounted to a
meagre Rs. 3 crore.
The NBFCs’ direct
exposure to real estate under “other” heads was limited, as was their indirect
exposure, at just 0.1% of total exposure.
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