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Banks facing slow credit offtake, flow to realty needs to improve: RBI Guv
Business Standard  |  February 25, 2020

BS Web Team New Delhi

The Reserve Bank of India on Monday said credit flow to the real estate sector needed to improve, as slowing credit offtake was one of the challenges facing Indian banks. RBI Governor Shaktikanta Das said, "RBI proposes to take thematic studies across financial institutions, and top 50 Non-Banking Financial Companies (NBFCs) are also being monitored very closely.

 

Real estate developers, battling a prolonged demand slowdown, are struggling to raise funds to construct or complete their projects. Amid a liquidity crunch following the crisis that came to light at Infrastructure Leasing and Financial Services (IL&FS) in 2018, it has become difficult for developers to raise construction finance, once considered the safest form of lending by banks and NBFCs.

 

Meanwhile, NBFCs and housing finance companies (HFCs) may be the next in line to be permitted an extension of date for commencing commercial operations.

 

He also asked banks to be prudent in lending and highlighted that the quality of appraisal is important.

 

He mentioned that the issue of governance in public and private sector banks is of utmost importance and the management of banks have a critical role to play in improving the governance.

 

He noted that the regulations are in compliance with Basel III guidelines.