Banks to continue lending to real estate sector

Despite the recent controversies surrounding land acquisition and real estate projects in Noida, Greater Noida and Noida extension, banks would continue lending to the real estate sector.

“Banks cannot stop lending to the sector, although they may be a little more cautious in their approach so far as the title of land is concerned,” PNB CMD K R Kamath told Business Standard here.

“What has happened in Noida could well have happened elsewhere and hence there should not be a knee-jerk reaction to the issue,” he added.

Kamath said real estate sector had always been a sensitive sector so far as the true valuation of the asset prices was concerned.

“However, we will take care that we do not jump into something that we aren’t sure of,” he said referring to future real estate lending arrangements.

Farmers in Noida (Gautam Budh Nagar district in Uttar Pradesh) have been on warpath of late and moved the Allahabad High Court against authorities, alleging forcible acquisition of their land and unfair deal in payment of compensation.

The court had already de-notified large swathes of land under real estate development. This had made the banks jittery about the prospects of possible bad assets and defaults relating to these projects, wherein they had lent to developers and builder s. Besides, large number of investors had taken bank loans to buy flats being developed.

Meanwhile, the HC had allowed the farmers and authorities to resolve the issue amicably and apprise the bench accordingly before the next court hearing.