Finance minister Pranab Mukherjee's direction to state-run lenders to prevent a recurrence of the loans-for-bribes scandal, and banks' decision to go for a critical appraisal of all real estate loans above Rs 50 crore may stall projects and drive developers to private funds.
Liquidity for the sector may dry up as bankers turn cautious in sanctioning fresh loans, forcing builders to cut prices to improve cash position, helping prospective buyers who have been holding on due to high prices.
DB Realty tumbled 10%, Indiabulls Real Estate lost 5.2%, DLF fell 3.8%, and Unitech declined 6% as a fund shortage threatens to derail their project execution, which had just started to show signs of recovery after the 2008 credit crisis.
The arrest of eight finance executives by the Central Bureau of Investigation on Wednesday on charges of taking bribes to sanction loans does not lead to a systemic risk since the amount involved is tiny, bankers and bureaucrats said. It is getting more attention than it deserves, they said.
with thanks : Economic Times : link in headline for detailed news.
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