Around Rs 1.35 lakh cr real estate debt under serious pressure
26 Jul 2021
2 Min Read
CW Team
Due to the poor visibility of loan servicing, around Rs 1.35 lakh crore of Real Estate debt is under severe pressure. However, nearly Rs 5.02 lakh crore of total loan advances to real estate firms by banks, Non-Banking Financial Companies (NBFCs), and home financiers are not under stress.
Financial institutions have provided approximately Rs 7.5 lakh crore to developers.
According to the media reports, another 15% (nearly $15 billion) is under some stress but has a range for resolution. While approaching the 2019-end, total real estate loans of almost Rs 7 lakh crore (16%), was seriously stressed.
Despite the damage done by the Covid-19 pandemic over the last year, merely 18% of the $100 billion loan value falls below this category, which is notably better than other significant sectors like telecom and steel.
Separately, banks estimated for the largest share of complete real estate loans with 37%, followed by NBFCs 16%, housing finance companies with roughly 34%, and 13% loans provided under trusteeships.
Although HFCs are much better with 75% and 66%, each. It is not a surprise that around 46% of the entire NBFC lending is on the watch-list. Moreover, nearly 75% of the total lending to Grade A developers is on the safe side.
On the other side, a high amount of realty loans provided to Grade B and C developers need strict observation. Nearly 55% of the loans given to Grade B developers is below the severe pressure and 73% for Grade C developers.
As per the report, NCR and Pune are both high on the pressure with 40% and 39%, each, of the total loan provided to them, followed by Mumbai with 37%.
Also read: NAREDCO demands one-time loan restructuring for stuck realty projects
Due to the poor visibility of loan servicing, around Rs 1.35 lakh crore of Real Estate debt is under severe pressure. However, nearly Rs 5.02 lakh crore of total loan advances to real estate firms by banks, Non-Banking Financial Companies (NBFCs), and home financiers are not under stress.
Financial institutions have provided approximately Rs 7.5 lakh crore to developers.
According to the media reports, another 15% (nearly $15 billion) is under some stress but has a range for resolution. While approaching the 2019-end, total real estate loans of almost Rs 7 lakh crore (16%), was seriously stressed.
Despite the damage done by the Covid-19 pandemic over the last year, merely 18% of the $100 billion loan value falls below this category, which is notably better than other significant sectors like telecom and steel.
Separately, banks estimated for the largest share of complete real estate loans with 37%, followed by NBFCs 16%, housing finance companies with roughly 34%, and 13% loans provided under trusteeships.
Although HFCs are much better with 75% and 66%, each. It is not a surprise that around 46% of the entire NBFC lending is on the watch-list. Moreover, nearly 75% of the total lending to Grade A developers is on the safe side.
On the other side, a high amount of realty loans provided to Grade B and C developers need strict observation. Nearly 55% of the loans given to Grade B developers is below the severe pressure and 73% for Grade C developers.
As per the report, NCR and Pune are both high on the pressure with 40% and 39%, each, of the total loan provided to them, followed by Mumbai with 37%.
Image Source
Also read: NAREDCO demands one-time loan restructuring for stuck realty projects
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