RBI raises concern over high loan exposure to infra, realty

Some of the infra loans extended by banks in the last couple of years have already become stressed assets.

The Reserve Bank of India (RBI) on Wednesday expressed its concerns over increasing loan exposure to the real estate, housing and infrastructure sectors. “We are very much concerned about further exposure by banks into this segment,” RBI Deputy Governor R Gandhi said.

The real estate and housing sector now accounts for 13-14 per cent of the banks’ exposure. When infrastructure loans are included, the total exposure rises to 25 per cent of total loans, he said at an event organised by industry body Ficci here.

He said that exposure to the real estate sector has gone up from Rs 60,000 crore in 2007-08 to Rs 1,54,000 crore now and housing exposure from Rs 2,60,000 crore to Rs 5,40,000 crore. Infrastructure exposure has more than doubled to Rs 8,40,000 crore.

Story continues below this ad

Some of the infra loans extended by banks in the last couple of years have already become stressed assets.

“Banks cannot put all eggs into one basket. When they have already reached 25 per cent, naturally they will have hesitation to increase it further. One cannot overexpose to one segment or sector,” he said.

Gandhi said the RBI was concerned about further exposure beyond these levels. “We have to take care of banking sector health, and, at the same time, we will have to support infrastructure growth. Natural growth will happen, but increasing the proportion beyond this may be a tall order,” Gandhi said.

Gandhi said the central bank has to balance the credit requirements of all the segments of the economy. Some sectors may get priority depending on the situation, he said.