Skip to content

Bank in India examines books of ten developers over loans fears

The move comes amid growing concern among bankers that the global economic downturn could result in large scale defaults.

The companies identified for assessment are DLF, Indiabulls Real Estate, Unitech, HDIL, Mahindra Lifespace, Peninsular Land, Ansal Properties, Phoenix Mills, Anantraj Industries and Akruti Citi Ltd.

The assessment is based on available information in the public domain. Also RBI has sourced data on loans, cash deposits and other fixed deposits held by these companies from all banks and mutual funds.

Most of the companies have also borrowed through non banking financial companies (NBFCs) that they have floated, and the central bank is verifying the books of these independently.

'The exercise is a comprehensive analysis of the data relating to these companies for determining the correct debt-equity ratio, solvency, state of liquidity to avert defaults, cash flows and profit margin in the current operations,' a spokesman said.

After the review, the companies or their NBFC arms may be advised to check exposure in line with cash flows and banks may also be asked to cut exposure.

Despite more than a 20 per cent fall in prices of houses in new projects, a majority of home buyers are looking for a further price reduction, a survey by an international brokerage shows.

Developers are struggling to sell real estate. Many have launched new projects with 20 to 25% price cuts, but experts expect prices to fall further by around another 20% before interest picks up.

Property buyers, faced with prospects of dwindling incomes and job cuts, are yet to make up their mind on buying new homes despite the price cuts and lower interest rates.

Though DLF, HDIL and Unitech have sold nearly 1,000 apartments in their new projects in the last one month, a fatigue will set in among buyers, who expect prices to fall further, according to a recent survey.