Industry Experts Believe Lending to the Realty will not decline
The RBI is concerned about transparency in the system. If good projects come up, banks will fund them. Lending to the sector will not decline but what would really impact the sector is the time-consuming process of obtaining approvals from various regulators and inflation.
The Reserve Bank of India has laid out strict due diligence standards for banks while sanctioning loans to real estate companies. Industry Experts says RBI is concerned about transparency in the system and Banks will fund them if property or project has required approval or clear title.
“Banks will continue to fund real estate projects. The RBI is concerned about transparency in the system. If good projects come up, banks will fund them. Availability of funds will not be a major cause of concern for the sector,” consultancy firm Jones Lang LaSalle’s Chief Executive Officer (Business) Sanjay Dutt said during an event organized by Girem Corporate Capital here.
“The real estate sector will continue to grow. But if the government speeds up its clearance procedures, the supply of housing stock will increase, bringing down property prices. The government and regulatory authorities need to realise that allowing quick permissions will act in favour of consumers.” However, what would really impact the sector is the time-consuming process of obtaining approvals from various regulators and inflation, which is leading to an increase in input costs for developers, he said.
HDFC Chairman Deepak Parekh has also said that there was no slack in demand for home loans as “there is a shortage of houses and people want to buy a house”.
“I think even if the interest rates go up by another 100 basis points, even then there would be demand; however, if it goes up 400-500 points, who knows what will happen. But people won’t stop purchasing a house because of a half a per cent hike in interest rates,” Parekh said.
A senior official from Axis Bank , said, “Of our total lending last year, 3-4 per cent was toward real estate sector. We will continue to lend at same levels in the future. I don’t think there will be any impact on lending by banks for the sector. Only the banks will now be more cautious.”
RBI is concerned about transparency in the system and banks will now be more cautious in lending to the sector. But bank lending to realty would not decline, say experts.
Banks lending to the Realty, Lending to the Realty, Mumbai, Mumbai Builders, Process of obtaining approvals, Real estate in India
