In more troubles for the crippled realty sector, system-wide credit losses to lenders have jumped to 7.33 per cent in June 2019 from 5.74 per cent in June 2018, according to the RBI data. This spike has been led by state-run banks, whose impairment has jumped from 15 per cent in June 2018 to 18.71 per cent in June 2019, says the financial stability report released by the RBI on Friday.
If we look the numbers from June 2016, the system wide losses stood at 3.90 per cent and for PSBs, it stood at 7.06 per cent, which since then has been on a steady climb-increasing to 4.38 per cent and 9.67 per cent respectively in June 2017.
The FSR said the numbers are based on an analysis of 310 real estate borrowers and the impairment numbers are based on 90-days past due.
While the aggregate exposure to realtors approximately doubled, the aggregate share of HFCs and PVBs increased and PSBs’ aggregate share came down sharply. This might, however, understate the exposure of PSBs to the sector given their exposure to a few NBFCs well entrenched in the real estate sector, says the report.
Fund flows to the sector have continued notwithstanding a general slowdown in credit growth. Since September 2018 when the IL&FS induced risk aversion was noted, all categories of financial intermediaries have increased their exposures to realtors, the sharpest being that of HFCs.
The aggregate impaired exposures continued to rise steadily over the period, with delinquency levels of all financial intermediaries higher as on June 2019 compared to their June 2018 levels. Given the structure of the sample this should be indicative of the evolution of general industry-wide portfolio health rather than health of the real estate exposure in specific financial intermediaries, says the report.
To conclude, the report says analysis of 310 real estate related borrowers show increased stress although the aggregate exposure to the sample firms continued to increase, implying availability of credit.