By Accommodation Times Bureau
The Reserve Bank of India turning down banks demand for restructuring real estate loans without providing potential losses is bounding pressure on builders to lower the price as banks push to recover the loans. Many banks says, that if banks get the permission to restructure the loans without providing for losses they will lose the urge to insist on prompt payments from builders who in continue to hold on prices even if sales are low.
According to RBI data home prices have gone beyond limit. Real estate prices have been rising steadily going up and down. If banks pressure developers it could lead to fall in prices.
Home prices rose 6.7% in first quarter of the fiscal according to RBI data. Transaction volumes rose 9.3%. While property prices have been rising across the board, transaction volumes have been falling in main cities.
Bankers had sought special dispensation due to rising bad loans that are destroying their profitability. Total real estate bad loans of all commercial banks rose 55% to 64,900 crore on March 31, 2012 from 41,700 of previous year. State banks share was 59,100 crore, up 64% from 36,000 crore. Currently banks have to classify restructured loan a real estate company.