Even though the exposure of public sector banks to the realty sector has reduced, the exposure of Housing Finance Companies (HFC) to the sector has double in the past three years, to 23.81 per cent as June 2019, the Reserve Bank of India (RBI) has said.
“Since September 2018, when the risk aversion induced by Infrastructure Leasing & Financial Services Ltd began, all categories of financial intermediaries have increased their exposures to realtors, the sharpest being that of HFCs,” the RBI said in its latest Financial Stability Report (FSR) released on Friday.
Over the past four years, total financing to real estate companies nearly doubled to Rs 2.01 lakh crore, the FSR shows.
“The aggregate exposure to real estate companies almost doubled to Rs 2.01 lakh crore; the aggregate share of HFCs and private sector banks increased, while public sector banks’ aggregate share came down sharply,” the report said.
The share of private sector banks rose to 30.41 per cent from 23.62 per cent, exposure of PSBs nearly halved to 24.34 per cent as of June 2019.
The housing finance companies have doubled their share in builder loans to 23.81 per cent by June this year, compared with 12.17 per cent in June 2016.
Home financiers have collectively lent around Rs 47,900 crore to builders as of June 2019, up from Rs 12,770 crore in June 2016. But, their exposure in absolute terms did not change much for state-owned lenders.
On the other hand, the system-wide credit losses of banks too jumped from 5.74 per cent in June 2018 to 18.71 per cent in June 2019.
This spike has been led by public sector banks, whose impairment has risen from 15 per cent in June 2018 to 18.71 per cent in June 2019, the FSR added.
The system-wide losses stood at 3.90 per cent in June 2016, and for state-owned banks, it stood at 7.06 per cent. The losses saw a steady rise to 4.38 per cent and 9.67 per cent respectively in June 2017, said the report.
The FSR added that the numbers are based on an analysis of 310 real estate borrowers and the impairment numbers are based on dues that were past 90 days.