Further insight on the current state of the Indian economy will be provided with the release of July industrial production data on Wednesday 12th and August WPI (inflation) on Friday 14th. Recent news flow has generally been a little downbeat but the picture is not a uniform one.
Bottom Line: After no reduction in repo rate, the homebuyers…
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Track2Realty: The Reserve Bank of India (RBI) has released final guidelines for issuing new bank licences on Friday. This will pave a way for corporate houses to enter the banking sector.
Track2Realty-Agencies: The Finance Ministry has expressed the view that the Reserve Bank should allow real estate companies and broking firms to set up banks as adequate safeguards will be there to prevent exposure of promoters to related entities.
The Finance Ministry will meet chief executives of leading banks today, Sep 17, to discuss credit flow to the real estate and housing sectors. According to sources D K Mittal, Secretary of Financial Services, will chair the meeting of bankers, which will take stock of credit flow to the sensitive sectors.
Banking institutions have cut down on their lending to the real estate sector, according to a report put out on Wednesday by real estate consulting firm Knight Frank India.
The Indian banks have been hit the worst with the downturn of the real estate sector. Even after restructuring the loans to the developers, they have a collective deficit of Rs. 7 lakh crore. With spiraling input costs & property prices, demand in the real estate sector has been on a steady downfall. Given the declining demand, it is is unlikely that the real estate companies will be able to repay their bank loans, especially since banks are the only source of funds for the sector.
With interest rates remaining high and real estate prices rising further, the growth in housing loans declined to 12.1 per cent in fiscal 2011-12 from 15 per cent in the previous year. The growth rate in non-food bank credit was also down at 17 per cent during the year as compared with 20.6 per cent in the previous year, the Reserve Bank of India said.
Terming RBI’s decision to reduce cash reserve ratio (CRR) as a “positive step”, the industry body Confederation of Real Estate Developers’ Association (CREDAI) said on Friday, march 9, the move would enable financial institutions to fund real estate projects.