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Non-performing assets in commercial banks on the rise
27 Jul 2010
Non-performing assets (NPAs) in New Delhi have increased due to a restructuring of loans to the real estate and textile sectors. The government may further tighten financing to real estate businesses to prevent an asset bubble.
Banking secretary R Gopalan said NPAs, in the restructured loan category of the real estate sector, had gone up. He said the government may not go in for any more restructuring of loans as the past concessions were one-time measures and granted to beat the slowdown.
The tough stand of the government, may make survival of many builders and developers difficult.
RBI has indicated that it will further tighten its monetary policy as double digit inflation is a major concern for an overheating economy. Even the PM's economic advisory council in its first quarter review last week urged the central bank to intervene with tighter monetary policy to contain inflation.
The outstanding credit of banks, both public and private, to commercial real estate at the end of March 2009 was Rs 91,500 crore against Rs 63,000 crore till March 2008. This was an increase of 45% over the previous year and more than double the amount of Rs 44,000 crore exposure of these banks during boom period of 2007.
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