It  seems that the Reserve Bank of India’s move to ease lending to real estate hasn’t augured well with the banking sector. The apex bank effectively reduced the tax on lending to the real estate sector, which means banks can now more freely lend to the realty sector.

Considering the slump in the real estate sector with higher dips in demand for property and developers finding it hard to secure more land bank, which earlier was fulfilled with revenues generated from their projects itself, and increasing risk of rising NPAs of banks, the banking sector has come into focus once again.

The BSE Bankex was down 4.5 per cent Monday at 10:38 am. The country’s largest private sector bank, ICICI Bank, fell 6.92 per cent to Rs 368.55. It was followed HDFC Bank, which was down 6.09 per cent to Rs 950, Axis Bank down 5.24 per cent, Kotak Bank down 4.88 per cent, Union Bank down 3.92 per cent.

BSE Realty Index fell by 5.10 per cent. Unitech was down 8.5 per cent, Peninsula Lan falling by 6.11 per cent, Indiabulls Realestate has fallen close 5.67 per cent. Ansal Infrastructure was down 5.76 per cent.

The benchmark Sensex was down by 2.6 per cent to 9142.60.

Said Rahul Amritlal, an analyst with a CFP, “There is still concern left in the market with regard to trading considering the obscurity over global markets movement. We would see some respite after March-April period as the Assembly election proceeds. Till then, it would be range-bound activity as regards the Sensex movement.”

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