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The editorial “Tempering lending to real estate” (Business Line, October 29) calls for a regulation of the real estate sector. The apex bank move to regulate the provisioning norms for commercial real estate sector lending would make it dear. The restructuring process is only a gimmick in the asset classification process and it will not guarantee the asset quality.

In a stable economy, the credit offtake in respect of commercial real estate usually increases and during recessionary times, such assets may deteriorate in quality. The interest rates hike may not have much influence in any direction.

The higher cost of funds has a telling effect on asset quality .The only way to decrease asset prices is to diminish the lending to the sector and, perhaps with this intention, the RBI has proposed tightening the asset norms.

C. P. Velayudhan Nair Kochi

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