New Delhi: About Rs 1 lakh crore of the money lent by the banks and NBFCs to the real estate companies is currently facing severe stress, according to a study by ANAROCK Capital. Severe stress means that there has been fairly high leveraging by such builders who have either limited or extremely poor visibility of debt servicing owing to a number of factors.
The current quantum of loans given by banks and NBFCs to the realty firms is around Rs 7 lakh crore and about 62 percent (Rs 4.2 lakh crore) totally stress-free.
Another 22 percent (Rs 1.45 lakh crore) is facing some pressure but can be potentially resolved. The stress on this segment is mostly on recovery of the interest part and not on the principal amount.
Housing finance companies (HFCs) accounted for about 38 percent of the total loans given to the real estate, representing the largest pie. They are followed by banks which accounted for around 34 percent share while NBFCs have 28 percent share (including loans given under trusteeships). Around 70 percent of the money given by banks to the real estate industry is in comfortable position. About 65 percent of the loans given by HFCs is falling under comfortable position. Around 58 percent of the loans given by NBFCs is on watchlist.
“In retrospect, there has been continuous shrinkage of lending to Indian real estate in recent years by both banks and NBFCs/HFCs amidst non-repayment of some loan dues and NBFC crisis post the IL&FS default,” says Shobhit Agarwal, MD & CEO – ANAROCK Capital.