NRI Real Estate and Property Investment in India
 |  WWW.NRIREALTYNEWS.COM
 
Real Estate Feels the Squeeze as RBI Narrows Funding Avenues
Thursday, June 14, 2007

Real estate developers in India are facing the brunt of high interest costs on loans from Indian banks. Since the ban on external commercial borrowings imposed by the Finance Ministry on May 18, builders have had to incur the highest rates on their credits in the last 5 years.

Real estate developers Unitech and Parsvnath have had to alter their funding arrangements as the Ministry came down on overseas borrowings, and will have to provide for higher costs on domestic loans.

Moreover, banks have also been directed to restrict loans to the real estate sector. The affected builders are strapped for funds to buy land and raw material, and the community fears that their projects could come to a standstill if remedial measures are not taken soon enough.

The RBI has increased its overnight lending rate to banks multiple times over the last 18 months, and raised their reserve requirements with a higher risk weightage to control lending.

As a case in point, Parsvnath will require almost Rs.2000 crore to meet its targets of completing 153 million sq. ft of townships, shopping malls and SEZs in 17 states across India but the daunting interest rate of 14% is discouraging the builder to take up the loan.

Meanwhile, the DLF issue was subscribed 1.17 times on its second day on Tuesday, encouraging other real estate developers planning IPOs to look forward to this avenue to fund their projects.

Related Readings

RBI restricts Issue of Hybrid Instruments under FDI

Add to your Social Bookmarks:
ADD TO DEL.ICIO.US ADD TO DIGG ADD TO FURL ADD TO NEWSVINE ADD TO NETSCAPE ADD TO REDDIT ADD TO STUMBLEUPON
ADD TO TECHNORATI FAVORITES ADD TO SQUIDOO ADD TO WINDOWS LIVE ADD TO YAHOO MYWEB ADD TO ASK ADD TO GOOGLE  

 

 

Return to India

NRI INSURANCE

NRI SERVICES

 

Indian Cities Guide

DELHI   NOIDA   GHAZIABAD
         
GURGAON   MUMBAI   AHMEDABAD
         
KOLKATA   CHENNAI   HYDERABAD
         
BANGALORE   PUNE   CHANDIGARH
         
..More cities »
NRI Communities in Different Countries  
Indian Embassies & Consulates in Different Countries
 
NRI Newsletters  
NRI Feeds - Syndications