'Real estate loans threaten to hit banks'

"The real estate sector posed some concerns given the large and growing share of these loans in the credit portfolio of banks, its NPAs witnessing higher than system level NPAs growth, and potential of greater slippages into NPAs," RBI said in its Financial Stability Report.

The apex bank, however said that the share of real estate NPAs in the gross NPAs of the banking sector stood at 15 per cent against the share of sector's credit in total credit at 17.7 per cent.

The credit to the sector registered a growth of 24.6 per cent in 2010-11 against 17 per cent in the previous year, it said.

Residential mortgages and the commercial real estate registered a growth rate of about 24 per cent, the central bank added.

Meanwhile, the new private sector and foreign banks increased their commercial real estate exposure by 59 and 69 per cent, respectively in 2010-11 against the single digit growth rate witnessed in the previous year.

The rate of growth of NPAs in commercial real estate segment stood at 19.8 per cent was also higher than the overall NPA growth rate of 14.8 per cent.