The Reserve Bank of India on Wednesday clamped restrictions on Urban Co-operative Banks (UCBs) to exposure on realty sector up to 15% of their total deposits.
Photo by Telstar LogisticsSpecified in the circular issued by the Reserve Bank of India , it said the total exposure of UCBs to realty sector, including individual housing loans and commercial real estate, should be restricted to 15% of total deposit resources of any bank.
It further mentioned that the loans granted against the security of any immovable property should be classified as Real Estate Loans. The source of repayment will determine whether the exposure is against commercial real estate. Moreover, the ceiling of 15% is to be reckoned on total deposits of a bank based on the audited balance sheet as on March 31 of the fiscal year 2009-10.
Only time will tell what this change has in store for the real estate industry.