| The Reserve Bank of India is reviewing
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| | strict observation, though any concrete
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| banks' exposure to the commercial real
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| | step by the RBI to check the flow of
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| estate sector.
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| | credit might take some time.
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| This comes on the back of a continuous
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| | On the other hand, banks have become
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| rise in prices in the sector, even as the
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| | cautious in lending to the sector and are
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| regulator has followed prudential norms
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| | cutting down their exposure made in the
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| for taming the flow of bank credit by
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| | form of venture capital.
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| raising the risk weights for capital
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| | They are not only reviewing proposals for
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| allocation.
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| | commercial real estate funding, but have
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| The RBI is contemplating a sectoral cap
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| | also become wary of investing in bonds
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| for limiting the flow of bank credit to
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| | floated by real estate companies.
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| the sector, in line with the limits
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| | A study by the RBI has revealed that
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| imposed for capital markets. Another
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| | banks which have lent heavily to the
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| option being considered is to further
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| | commercial real estate sector are not
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| raise the risk weights on such loans.
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| | necessarily exposed highly to retail home
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| According to banking sources, further
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| | loans.
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| prudential tightening for the commercial
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| | In fact, the study did not find any
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| real estate sector would not have been
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| | correlation between the two categories of
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| required had the regulator gone ahead
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| | lending, said a banking source.
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| with the implementation of the revised
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| | Bankers felt raising the risk weight
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| capital adequacy norms, popularly known
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| | might send a signal that the RBI was much
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| as Basel II norms.
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| | concerned about banks' exposure to the
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| This is because under these norms, risk
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| | commercial real estate sector, which was
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| weights are proportionate to the
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| | anyway not overly dependent on bank
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| sensitivity of the sector. The higher the
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| | finance.
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| risk weight, the higher is the capital
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| | There were overseas private equity funds,
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| allocation.
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| | especially in West Asia and South East
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| Sources close to the development said the
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| | Asia, which were bullish on Indian real
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| commercial real estate sector was under
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| | estate, they said.
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