RBI may cap bank loans to real estate

Did you people hear about RBI holding the Damocles sword over the banks??? If no, then here is a chance for you to find out what it is?

The Reserve Bank of India is keeping an eye over the activities of the banks lending huge amount of money for financing real estate projects. However, it is a crucial step taken by the authorities because of continuous hike in prices of the property.

The RBI is making an effort to limit the flow of bank credit to realty sector, in accordance with the limits enforced for capital markets. According to the analysts, raising the risk weights on such type of loans is another way to resolve the problem.

This has certainly cautioned the banks which have started lending to the sector with a discerning eye. Data showcased by the RBI reveals that banks which have shown keen interest in funding commercial real estate sector are not necessarily exposed highly to retail home loans. Moreover, industry experts have not yet succeeded in finding out any interconnection between the two categories of lending.

What affect do you think this cat-and-mouse game going between RBI and other banks can cause to the booming commercial real estate in India?
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  • This never had more relevance than present times when some of those "banks with a discerning eye" couldn't see the intention of those real estate companies that took them for granted. So it was thought of in 2006 and it took till 2018 to know that a lot of money was being misused, wasted, laundered and what not? Let's hope they continue to keep a discerning eye in the forthcoming years too!