Posted: Thursday, Jun 24, 2010 at 2202 hrs IST
Updated: Thursday, Jun 24, 2010 at 0102 hrs IST
Mumbai: As real estate gets back on track, banks are lending more money to this sector. RBI had increased the provisioning requirement for advances to the commercial real estate sector, classified as standard assets, from 0.40% to 1%. A study on growth in advances to real estate of 22 public sector banks (PSBs) and 10 private sector banks in 2008-09 and 2009-10 reveals that advances to real estate from PSBs rose by 15% as against a decline of 0.4% in private banks.
An analyst from a broking firm said, “Real estate sector, residential as well as commercial, has been growing rapidly over the last few years. The rising disposable income and increasing number of nuclear families is driving the demand for residential properties. In the commercial space, the increasing participation of retail giants for setting up malls and related activities centres have resulted in rapid growth in this sector. So banks have been aggressively lending to this segments.” Among the 22 PSBs, four banks including Bank Of Baroda, Syndicate Bank, State Bank of India (SBI) and Punjab & Sind Bank showed more than 30% increase in their advances to real estate during 2009-10.
Between FY09 and FY10, advances to real estate of 22 PSBs rose by 15% to Rs 3.01 lakh crore from Rs 2.62 lakh crore. 32% of PSBs exceeded the average increase of 22 PSBs in advances to real estate sector during 2009-10. The highest and lowest increase in advances to real estate was seen in Bank Of Baroda and Corporation Bank, respectively. In 2008-09, the highest advances to real estate seen in SBI followed by Bank Of Baroda and Bank of India.
The total advances to real estate sector of SBI rose by 35.9% to Rs 87,125 crore in 2009-10 from Rs 64,105 crore in 2008-09. And the ratio of advances to real estate to total advances increased from 11.82% to 13.79%.Among the private banks, highest increase in the advances to real estate was of Development Credit Bank (DCB),where it increased from Rs 225 crore to Rs 380 crore. The total advances of DCB rose by 5.6% to Rs 3,459 crore during 2009-10 from Rs 3,274 crore during 2008-09. And the ratio of advances to real estate to total advances increased from 6.87% to 11%.
The advances to real estate in Yes Bank rose from Rs 1,024 crore to Rs 1,670 crore. HDFC Bank had advances to real estate of Rs 18,473 crore during 2008-09 which rose to Rs 25,293 crore during 2009-10. However, ICICI Bank showed a decline of 16.8% in its advances to real estate during 2009-10
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