New Delhi: "... Some of the companies operating in the real estate
sector have significant exposure in the form of advances,
investments, etc. to their subsidiaries and other group or
related entities," RBI said in a notification.
As a matter of prudence, banks may meticulously assess
the inherent group risk of their borrowal accounts falling
under the purview of real estate sector, the RBI added.
The central bank further said that while assessing the
loan requirements of large builders or land developers, they
may carefully analyse the financial credentials and viability
of the borrowers supported by the position of the group.
The banks may also examine the financial credentials or
viability of the relevant unconsolidated related entities such
as Special Purpose Vehicles, it added.
If the RBI advice is headed by banks, they will assess
the risks associated with other interests of the real estate
companies and may reduce the loans depending on the risk
factor.
Bureau Report
First Published: Thursday, September 24, 2009, 22:02