Worried over increasing exposure to the real estate sector, RBI has
increased risk weight exposure to the commercial real estate by 25 basis
point to 125%. Commercial real estate exposure is 2 to 3% of the total
real estate exposure.
Now banks will allocate more capital for every loan sanctioned,
forcing banks to conduct a better due diligence.
It is hoped that with this prudent move, exposure to commercial real
estate will become more.
The increase in risk weight average includes fund-based and non fund-based
exposures secured by mortgages on commercial real estates and investments in
mortgage-backed securities and other securitised exposures.
Commercial real estates include office buildings, retail space,
multi-purpose commercial premises, multi-family residential buildings,
multi-tenanted commercial premises, industrial or warehouse space, hotels,
land acquisition, development and construction, et al.
30/7/05
