NBFC crisis may push up borrowing costs for real estate developers

Along with housing finance companies, NBFCs account for about 60% of property developers' loans

The latest crisis of non-banking financial companies (NBFCs) could push up borrowing costs for property developers and pose challenges for big real estate developers.

The recent downgrade of Reliance Capital has revived liquidity problems for NBFCs, which were recovering from the crisis triggered by the IL&FS defaults last year.

Along with housing finance companies (HFCs), NBFCs account for about 60 per cent of property developers’ loans.

“Lending rates may go up 60-70 basis points now. So far, only small and mid-level developers were affected. I feel even bigger ones will face liquidity problems now,” said Amit Goenka, managing director and chief executive officer