RERA scares the bank for next round of bad loans

Post introduction of Real Estate Regulation Act (RERA), the Bankers are afraid that next round of bank loans may come from real estate, though banks claimed that have only 5 per cent direct exposure to builders.

“We have a few developers in the North who have not been constructing property, or a slowdown in construction has triggered some movement in the NPA category. This is not a significant number, but you do see some stress when these changes happen,” said PS Jayakumar, MD, Bank of Baroda.

“We have seen some issues on the luxury housing segment but we are very bullish on affordable housing,” said Pralay Mondal, business head Retail Banking and Business Banking at Yes Bank.”There’s a little bit of slowdown as clarity is emerging on RERA and there is a lot of pressure on the cash economy. But the good thing about RERA is that today we can know the status, whether the project is compliant or not, and it is very good for the customers at the end of the day.” According to RERA, builders are expected to disclose project-related information, to customers.