Indian banks bet big on realty

Despite the global financial meltdown owing to overexposure to the housing sector, Indian banks were quite bullish in their investments to the real estate.

The total outstanding credit to the real estate sector by Indian banks both public sector and private at the end of March 2009 was Rs 91,500 crore as against Rs 63,000 crore till March 2008. This was not only an increase of 45% over the previous year but was more than double the sum of Rs 44,000 crore exposure of these banks during the boom period of 2007.
The major portion of this huge lending came from government-owned banks. This despite the fact that RBI had prescribed regulatory limits on banks exposure to individual and group borrowers as a preventive measure given the sub-prime crisis in the western world.
Punjab National Bank (PNB) lent over Rs 11,000 crore from June 2008 to May 2009, registering an increase of about 390% over the previous year when its total outstanding credit to commercial real estate sector was merely Rs 2,255 crore.
Punjab National Bank was followed by the State Bank of India which extended credit of Rs 10,467 crore till May 2009 as against its Rs 6,062 crore outstanding till May 2008, an increase of 73%, according to finance ministry data.
ICICI Bank was the third in the list of top 10 banks as per their exposure having lent a little more than Rs 4,900 crore till May this year. It, however, registered a negative growth of 14% as in the previous year its total lending to this sector exceeded Rs 5,700 crore. Other banks that figured in the list of top 10 were: Indian Overseas Bank, Oriental Bank of Commerce, Axis Bank, Bank of India, Indian Bank, Central Bank of India and Union Bank of India.
Among the leading private banks, HDFC Bank seemed cautious in taking risk, especially during the downturn. The banks total lending till May 2009 was Rs 757 crore as against Rs 250 crore till May 2008. HSBC extended Rs 702 crore as against Rs 425 crore in the same period, the amount was Rs 484 crore in case of Citibank in May 2009.

Despite the global financial meltdown owing to overexposure to the housing sector, Indian banks were quite bullish in their investments to the real estate.

The total outstanding credit to the real estate sector by Indian banks both public sector and private at the end of March 2009 was Rs 91,500 crore as against Rs 63,000 crore till March 2008. This was not only an increase of 45% over the previous year but was more than double the sum of Rs 44,000 crore exposure of these banks during the boom period of 2007.

The major portion of this huge lending came from government-owned banks. This despite the fact that RBI had prescribed regulatory limits on banks exposure to individual and group borrowers as a preventive measure given the sub-prime crisis in the western world.

Punjab National Bank (PNB) lent over Rs 11,000 crore from June 2008 to May 2009, registering an increase of about 390% over the previous year when its total outstanding credit to commercial real estate sector was merely Rs 2,255 crore.

Punjab National Bank was followed by the State Bank of India which extended credit of Rs 10,467 crore till May 2009 as against its Rs 6,062 crore outstanding till May 2008, an increase of 73%, according to finance ministry data.

ICICI Bank was the third in the list of top 10 banks as per their exposure having lent a little more than Rs 4,900 crore till May this year. It, however, registered a negative growth of 14% as in the previous year its total lending to this sector exceeded Rs 5,700 crore. Other banks that figured in the list of top 10 were: Indian Overseas Bank, Oriental Bank of Commerce, Axis Bank, Bank of India, Indian Bank, Central Bank of India and Union Bank of India.

Among the leading private banks, HDFC Bank seemed cautious in taking risk, especially during the downturn. The banks total lending till May 2009 was Rs 757 crore as against Rs 250 crore till May 2008. HSBC extended Rs 702 crore as against Rs 425 crore in the same period, the amount was Rs 484 crore in case of Citibank in May 2009.





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