Banks to continue lending to realty sector: Top bankers

Banks to continue lending to realty sector: Top bankers

Mumbai: Underplaying the housing finance racket as an isolated case, bankers on Friday affirmed that they would continue lending to the realty sector, while Bank of India -- one of whose general managers has been arrested -- said its exposure to commercial ventures is Rs3,800-crore.

“Our exposure to the commercial real estate sector is Rs3,800-crore," BoI CMD Alok Misra told reporters after a meeting with the Reserve Bank here, adding that the figure does not include the “three accounts" that are under a cloud.

In the wake of concerns that funding to the realty sector may dry up, Misra and other bankers said that they will continue lending to the realty sector.

“Housing companies will not suffer. If its a viable project (and) if its a profitable one, banks will continue to lend," Misra said, adding that BoI has taken certain precautionary measures in the wake of the scam.

“We have bifurcated sourcing and the sanction. Several layers of sanctioning processes will be involved and one person cannot influence," he said.

State Bank of India (SBI) chairman O. P. Bhatt, too said that banks would continue lending to realty projects, adding that both housing and real estate sectors are too important for the economy.

HDFC Bank MD Aditya Puri, said, “I think you are overplaying it. Its an isolated instance and the guilty will be punished. There is no systemic issue, there is no lack of regulation, there is no clamping down on any kind of borrowing."

Seven people, including the chief executive of LIC Housing Finance, LIC’s secretary-investments and a GM from BoI were arrested by CBI on Wednesday.

The officials were arrested on allegations that while sanctioning large-scale loans to corporates, they were working in collusion with loan-arranger firm Money Matters and overlooked regulatory guidelines for granting such approvals, for individual monetary gains.

Meanwhile, on recent reports that liquidity situation is getting tighter, Puri said, “liquidity is tight, but they have said they (the RBI) will ensure liquidity is there."

ICICI Bank’s chief executive and managing director Chanda Kochhar, said that liquidity is being managed well and there is “no crisis as such".

Asked whether his bank is contemplating a hike in interest rates, Puri said the bias is definitely upwards but there will not be an increase in rates immediately.