Anarock Says $14 Billion Loans To Builders Under Stress, Could Default
Another $21 billion of loans are under some pressure but can potentially be resolved.
Loans worth $14 billion (about Rs 1,000 crore) provided to real estate firms by banks, non-banking financial companies and housing finance companies are under "severe stress" and facing issues of debt servicing, according to a report.
"Over 62 percent or about $58 billion of the total loan advances ($93 billion) to Indian real estate by banks and NBFCs/HFCs is currently completely stress-free," Anarock said in a statement.
Another 22 percent (about $21 billion) is under some pressure but can potentially be resolved. The stress on this segment is largely on recovery of interest and not on principal amount.
"$14 billion (or merely 16 percent) of overall lending to Indian real estate is under 'severe' stress, meaning that there has been high leveraging by the concerned developers who have either limited or extremely poor visibility of debt servicing due to a combination of factors," the consultant said.
Housing finance companies accounted for the largest share of total realty loans equalling 38 percent, followed by banks at nearly 34 percent share while NBFCs have 28 percent share (including loans given under trusteeships).
"Of these, banks and HFCs are much better placed with 70 percent and 65 percent of their lending book in a comfortable position. However, it also comes as no surprise that nearly 58 percent of the total NBFC lending is on a watchlist," it said.