Don't Worry, Your Home Loan Rates May Not Rise Just Yet

News Posted - 2010-05-01

The Reserve Bank of India has raised policy rates by 25 bps in an attempt to rein in inflation. This is the third time that the bank has raised rates this year. Now, with the cash reserve ratio being raised by 1% in one quarter, everyone is eager to know if bank's lending rates will rise? Mr Aditya Puri, MD and CEO, HDFC Bank, India's second largest private sector lender, said lending rates may not be changed in the near-term. He said, "Lending rates are a complicated subject. It doesn't necessarily follow that if the rates are less, we will follow the rates. Our rates will depend upon the demand supply and the current cost of funds." Mr OP Bhatt, CMD, State Bank of India, India's largest state-owned lender, also sees lending rates determined by the demand-supply for funds. "The demand-supply equation in the market may change and credit pick-up may take place, if that happens some change in pricing will take place," he added.

Source:20 April 2010 moneycontrol.com

Lending To Realty Sector By Banks Declines

Reserve Bank of India (RBI) data reveals that banks are cutting down on loans to realty and reducing exposure to credit card debt. Loans to real estate increased by a meager 0.9%, while credit card outstandings have declined by 28.3% in the year to 26 February. Between 20 November 2009 and 26 February, credit card outstandings went down from Rs22,635 crore to Rs20,737 crore. However, outstandings on account of real estate loans went up from Rs88,581 crore to Rs91,607 crore. Growth in lending to real estate has been continuously declining, from 41.5% year-on-year (y-o-y) as on 28 August 2009 to 15.3% as on 20 November 2009, and now to 0.9%. This implies that the widely expected higher capital requirements for lending to the realty sector by RBI may not be necessary.

Source: 19 April 2010 livemint.com

Unitech To Have Free Cash Flows Of More Than Rs 3, 000 Crore Over The Next Two Fiscals

Realty major, Unitech Ltd is expected to have free cash flows of over Rs 3,000 crore over the next two financial years owing to improved sales and project execution, and a reduction in land buying. The company had seen negative cash flows from operations in the first half of the last financial year, but the cash flows became positive by the third quarter, at Rs 300 crore. The company sold Rs 5,500 crore worth of property last fiscal, which is likely to lead to inflows of about Rs 4,000 crore over fiscal 2011-12. Other than that, it is expecting fiscal 2011 sales to be similar to last fiscal, generating another Rs 3,200 crore over the next two years.

Source: 29 April 2010 DNA