Indian developers angering banks

Banks in India are furious at Indian property developers for not slashing property prices despite agreeing to do so in return for restructured loans, according to various reports...

Some banks are angry that despite an industry bailout programme and the relaxation of lending rules, constructors are refusing to cut what it claims are over inflated property prices.

One banker reportedly said, "There is a feeling among bankers that builders are choosing to retain assets on their balance sheets rather than reducing prices and getting rid of assets.

"In other words, to overcome the liquidity crisis, builders are pushing for restructuring of loans rather than selling off assets or reducing property prices," he added.

Major developers such as DLF, Unitech, Sobha, Omaxe, Parsvnath Developers and Housing Development and Infrastructure have approached the banks to restructure their loans.

Some developers have hit-back by blaming banks for charging high mortgage arrangement fees, which in turn is deterring many would-be buyers from the Indian property market, due to affordability constraints.

Anshul Jain, Chief Executive Officer of DTZ International, comments, "Demand is not a problem in India, however, affordability is. The supply needs to be introduced at the right price points to meet the demand, only then will the level of transactions pick up."

Source: www.homesoverseas.co.uk/news