Rs 1.3 lakh cr loans by banks, NBFCs to realty sector "severely stress"
New Delhi: Around Rs 1.3 lakh crore of money lent by banks and NBFCs to the realty sector presently is under “severe stress”.
There has been high leveraging by real estate developers who have taken these loans and there is limited or extremely poor visibility of debt servicing by them on account of several multiple factors, says a study by ANAROCK Capital.
“COVID-19 has had a cascading impact across sectors, and ‘severely stressed’ loans levels in Indian real estate were expected to go up substantially. However, real estate – particularly the residential segment - has fared better than anticipated. Towards 2019-end, of the total real estate loan of USD 93 bn, at least 16% was severely stressed. Despite the devastation of the pandemic over the last one year, only 18% of the total USD 100 bn loan value falls under this category. This is definitely far better than other major sectors such as telecom and steel,” said Shobhit Agarwal, MD & CEO - ANAROCK Capital.
The share of NBFCs and housing finance companies (including trusteeships) in the overall lending to the developers stands at around 63 percent. Banks’s share in the overall realty loans is the highest at 37 percent. This is followed by HFCs with about 34 percent.
Since 2013, the share of lending to real estate companies by NBFCs and HFCs has jumped sharply, at the expense of banks. But in the last 4 to 8 quarters, commercial banks have been more active.