RBI says there is No Threat of any Systematic Risk from the Housing Sector

By Accommodation Times News Services

Tata Housing to develop new project in Goa for Rs 400croreThe Reserve Bank of India on Tuesday released its Financial Stability Report (FSR) it publishes for the Financial Stability and Development Council (FSDC), the report suggests that there is a rise in home prices “moderated significantly” in 2015-16 and there is no threat of any systemic risk from the housing sector with the gross non-performing assets (NPAs) amongst retail loans being contained.

“With gross non-performing asset (GNPA) ratio around 1.3 per cent, the retail housing segment does not presently pose any significant systemic risk in the Indian context,” the RBI said in the report.

Compared with the overall GNPA ratio of 7.6 per cent for the entire banking system as of March, the stress in the retail loans is very low, which also explains the banks’ eagerness to tap into this segment, it said.

Following the 2008 financial crisis, which was traced to the housing bubble in the US, the regulatory vigil against potential risks has been increased.

The FSR said that apart from the catalytic role of the housing sector in economic development, home prices have a bearing on financial stability.

As per the market watchers, there has been a huge jump in unsold inventories of realty players due to a variety of reasons. According to a recent report, there were 2.26 lakh unsold houses in the Mumbai Metropolitan Region by end of fiscal year 2015-16, which is 31 per cent higher than the year-ago period.

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