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Loan Scam-Realtors may miss project deadlines

1 Comment Sub Category:Realty News Posted On: Nov 27, 2010

The Loan scam could have a short-term adverse impact on the real estate sector. Banks that have exposure to real estate are stepping up their due diligence. Such scrutiny may tighten realty firms’ liquidity positions as banks may go slow on loan sanctions. Though some realtors dismiss the problem as a minor aberration, there are worries that project pipelines and deadlines would be impacted.

For builders, there could be problems on the liquidity front. Some even say that banks and financial institutions may recall some loans to avoid them becoming non-performing assets (NPAs). Some also believe that it will have the salutary effect of cleaning up the system. Banks had already turned cautious during the recession. The latest developments would make them even more so. Developers fear loan scam will lead to freeze on loans. The Confederation of Real Estate Developers’ Association of India has said that “painting” the ‘loan-for-bribe’ as a scam, would lead to drastic reduction in credit for real estate companies.

Source: Economic times

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