Ambit Capital, a Capital Market Consultant, reported that the total exposure of lenders to developer loans is Rs. 4 trillion, out of which banks have an exposure of Rs. 1.8 trillion, while the remaining lump of Rs. 2.2 trillion is borne by NBFCs and Housing Finance Companies (HFCs). These NBFCs and mortgage lenders fear a huge NPA heap following variations in the realty sector caused by GST (Goods & Services Tax), Rera (Real Estate Regulatory Act) & Demonetization. They are exerting every possible trick to convince realtors to sell their inventories and pay back for developer loans.
Based on a report by the realty consultant JLL India, nearly 440,000 residential units were not sold in major cities by the end of 2017. Sahil Vora, founder and managing director of realty consultant SILA, also reported that NBFCs will be stringent while recovering from small developers. These lenders may also direct the mid-sized realtors to merge with esteemed developers to pay back for housing loans. He further informed that certain firms have tied up with project management teams to help the builders with funding and also get buyers to increase sales.
An estimated number of 34,700 ready-to-move-in homes are still not sold in the top seven metros that include Bangalore, Pune, Hyderabad, Kolkata, Chennai, Mumbai and Delhi/NCR. Pankaj Agarwal, an analyst at Amit Capital, added that banks have already started to cut their lending exposure to the realty sector, whereas NBFCs/mortgage lenders on the other hand, increased lending whilst depending on benign liquidity and the interest rate environment.