Friday September 25, 05:00 PM

RBI wants stricter assessment of estate risk

MUMBAI (Reuters) - The Reserve Bank of India has said that banks should meticulously assess group risk of their loan accounts related to real estate developers to check loan and investment exposure of such borrowers to their subsidiaries.

"It has been observed that some of the companies operating in the real estate sector have significant exposure in the form of advances, investments to their subsidiaries and other group or related entities," the Reserve Bank of India said in a circular.

The Reserve Bank said that banks should carefully analyse the consolidated accounts of property developers while assessing their financial credentials and viability of such borrowers.

Banks may also examine special purpose vehicles related to such borrowers, the central bank said.

(Reporting by Anurag Joshi; Editing by Ramya Venugopal)

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