Flow of funds to the real estate sector has continued notwithstanding a general slowdown in credit growth.

While the real estate (RE) sector has flagged access to funding to complete projects, the RBI’s analysis, which is based on TransUnion CIBIL data (for the sample of 310 RE companies), shows that total credit to this sector has increased from ₹1,66,286 crore as of June-end 2018 to ₹2,01,171 crore as of June-end 2019.

“Since September 2018 when the IL&FS-induced risk aversion was noted, all categories of financial intermediaries have increased their exposures to REs, the sharpest being that of housing finance companies (HFCs),” the report said.

The report said the aggregate share of HFCs and private sector banks to the realty sector increased while public sector banks aggregate share reduced sharply. This might, however, understate the exposure of PSBs to the sector, given their exposure to a few NBFCs well entrenched in the realty sector.

The evolution of impairment levels across financial intermediaries (for the sample of 310 real estate companies) shows that the the aggregate impaired exposures increased to 7.33 per cent in June 2019 from 5.74 per cent in June 2018.

“The analysis of 310 real estate related obligors gives evidence of increased stress, although the aggregate exposure to the sample firms continued to increase, implying availability of credit. However, the aggregate numbers for HFCs/ NBFCs / PVBs, while increasing, are relatively small in absolute amounts. PSBs’ exposure, particularly with regard to impairment is fairly large.

“However, this has to be seen in the context of their aggregate real estate portfolio performance,” the central bank’s report added.

Related Topics
comment COMMENT NOW