With spiraling input costs & property prices, demand in the real estate sector has been on a steady downfall. Given the declining demand, it is important to note how the real estate companies will be able to repay their bank loans, especially since banks are the only source of funds for the sector.
The banking sector is additionally facing concerns regarding deteriorating asset quality, rising provisioning costs, increased loan restructuring and also the unease that gross non- performing assets might rise. The sector is also foreseeing a disturbing trend given the outstanding loan figures. Moreover, out of the total loans recoverable from the banking sector, real estate sector accounts for the largest portion. As per the figures presented in the Lok Sabha, banks have to recover a whopping Rs 6,83,597 crore from the real estate sector alone and the gross NPA figures as on March 2011 stood at Rs 11,553 crore.
In terms of the exposure, ICICI Bank has to recover Rs 79,956 crore, which is almost 43% of its outstanding loan book. Axis Bank has to recover realty loans worth Rs 45,932 crore, nearly 36% of its outstanding loan book. Similarly, HDFC bank has to recover Rs 23,618 crore.
Moreover, the grave exposure to real estate loans comes at a time when the Reserve Bank of India has been increasing the risk weightage for lending to the real estate sector. The risk weightage currently stands at 125%.
On the other hand for PSUs, real estate sector amounts for the largest share of the overall gross advances. Public sector banks have to recover nearly Rs 5,18,766 crore of realty loans as on December 2011.
Country’s largest bank, State Bank of India has to recover Rs 1, 32,580 crore from the real estate sector, Bank of India has to recover Rs 20,702 crore whereas IDBI Bank has to recover around Rs 35,864 crore.
Outstanding Loans
Total Amount recoverable – Rs 6,83,597 cr
PSBs – Rs 5,18,766 cr
Pvt Sector Banks – Rs 1,64,831 cr
Gross NPAs
FY 09-10 – Rs 11,112 cr
FY 10-11 – Rs 11,553 cr
Private Sector Banks - Outstanding loans as on December 2011
Bank
|
Total Advances
|
Outstanding loans
|
Real Estate % to Overall Outstanding
|
ICICI
|
1,84,401
|
79,956
|
43.35%
|
Axis Bank
|
1,24,963
|
45,932
|
36.75%
|
HDFC Bank
|
1,89,483
|
23,618
|
12.46%
|
Kotak Mahindra
|
40,155
|
10,217
|
25.44 %
|
PSUS - Outstanding loans as on December 2011
Bank
|
Total Advances
|
Outstanding loans
|
Real Estate % to Overall Outstanding
|
SBI
|
7,27,487
|
1,32,580
|
18.22%
|
Bank of India
|
1,63,325
|
20,702
|
12.67%
|
IDBI
|
1,52,920
|
35,864
|
23.45%
|
PNB
|
2,46,581
|
42,858
|
17.38%
|
Source:www.yourmoneysite.com
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