As RBI indicates banks to provide support to big real estate firms, the troubled realty firms may soon be able to have a sigh of relief. According to a senior banker, the apex bank has recently written to selected banks asking them to finalize a workable solution after assessing the financial support given to builders. As RBI raised interest rate to combat the rising inflation last year, the real estate sector was the one to be hit the most.

The increase in interest rate, along with the economic slowdown all over the world has resulted in decreased demand and sales of residential and commercial property. The realty firms could earlier raise funds through equity and from capital markets, but since the starting of the global crisis, even these sources of funds have been choked.

The banks have also been reluctant to lend to the firms in these sectors as it has become highly risk prone. The govt. is now worried about the effect that suffering real estate sector has on sectors like cement and steel.

“The assessment should comprehensively bring out the financial vulnerability of the company and suggest possible ways to address this issue”, says the letter to banks from RBI.

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