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Non-banks increase share of builder loans: RBI study

MUMBAI: The share of builder loans has risen for non-bank lenders and private banks over the past four years, the latest central bank analysis of 310 companies showed, even as the proportion of public-sector banking exposure to this segment of the property industry nearly halved since 2016.

Over the past four years, total financing to real-estate companies nearly doubled to Rs 2.01 lakh crore, the central bank’s Financial Stability Report published Friday showed.

Housing finance companies have doubled their share of builder loans to 23.81% by June this year, compared with 12.17 percent four years ago. The share of private banks rose to 30.41% from 23.62%, while the exposure of state-run banks nearly halved to 24.34%.

“While the aggregate exposure to REs (Real Estate Companies) approximately doubled, the aggregate share of HFCs and PVBs increased, while PSBs’ aggregate share reduced sharply,” the report said.

Home financiers cumulatively lent around Rs 47,900 crore versus Rs 12,770 crore during the same period in 2016. The exposure in absolute terms did not change much, however, for state-run lenders.

“Since September 2018, when the IL&FS induced risk aversion was noted, all categories of financial intermediaries have increased their exposures to REs, the sharpest being that of HFCs,” RBI said.

According to Anarock Property Consultants, strong players with healthy balance sheets and often with diversified business interests beyond property, sailed through this difficult year and recorded decent housing sales and revenue growth.

“This year saw RERA (Real Estate Regulatory Authority) gain firmer ground with over 40% growth in project registrations,” said Anuj Puri, chairman at Anarock Property.

The government also took a major step toward safeguarding homebuyers’ interests “by banning the once-popular (but often misleading) subvention schemes,” Puri said.

Source: Economic Times