Property prices may crash
Loan scam to hit realty companies as bankers turn cautious in sanctioning fresh loans. The arrest of eight finance executives by the Central Bureau of Investigation on Wednesday on charges of taking bribes to sanction loans does not lead to a systemic risk but bankers turn cautious in sanctioning fresh loans for new property, forcing builders to cut prices to improve cash position.
All big-tickets loans, particularly to builders, will come under the scanner now. The arrest of finance sector executives for alleged corruption and passing on information regarding these transactions has shaken the banking sector. An unintended consequence of the scandal could be lower prices for home buyers as developers look to sell at a faster rate to improve cash flows.
Liquidity for the sector may dry up forcing builders to cut prices to improve cash position, helping prospective buyers who have been holding on due to high prices.
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