Financial Daily from THE HINDU group of publications
Friday, Mar 03, 2006


Group Sites

Home Page - RBI & Other Central Banks
Money & Banking - Housing Finance
Industry & Economy - Real Estate & Construction

Banks warned on real estate exposure

Our Bureau

Mumbai , March 2

The Reserve Bank of India has once again cautioned banks against excessive lending to the real estate sector. In a notification issued on Thursday, the RBI has directed banks that they should disburse loans involving real estate only after obtaining all government clearance.

The RBI said there was substantial increase in lending by banks to the real estate sector during the last few years. While the development of real estate was welcome, there was a need for banks to curb excessively risky lending by exercising selectivity and strengthening the loan approval process, the notification said.

The Economic Survey released last week had also indicated significant rise in bank credits to the real estate sector.

The central bank advised banks that while appraising loan proposals involving real estate, banks should ensure that the borrowers have obtained prior permission from government/local governments/other statutory authorities for the project, wherever required.

In order that the loan approval process was not hampered on account of this, while the proposals could be sanctioned in normal course, the disbursements should be made only after the borrower had obtained requisite clearances from the government authorities, the notification said.

More Stories on : RBI & Other Central Banks | Housing Finance | Real Estate & Construction

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
India, US seal nuclear deal

Airtel, Idea slash ISD rates by up to 50 pc
SC bars States from imposing sales tax on telecom services
Leeway for individual MFs likely
`Keep a keen watch on FMCG trends'
Navratna tag eludes BSNL again
IOC offloads 50 pc of its stake in GAIL
IOC group wins Bangalore airport bid
General insurers in a tizzy
Sensex touches 10,700-mark
Banks warned on real estate exposure

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line