PSBs slap notices on realty cos over Rs 20,000 cr dues

Written by Kumud Das | Sitanshu Swain | Mumbai | Updated: Feb 15 2011, 03:18am hrs
Public sector banks including State Bank of India, Bank of Baroda, Bank of India, Indian Overseas Bank have served notices to dozens of real estate companies to recover around Rs 20,000 crore of their exposure by March. The banks are now making efforts to recover their real estate loans which were restructured in the aftermath of global financial crisis in 2008.

However, some of the real estate companies which are currently witnessing low volume of business have already asked for further restructuring of these loans, a proposal which banks are generally not willing to endorse. M Narendra, CMD, IOB confirmed to FE that the bank has sent notices to some of the real estate firms.

Nagesh Pydah, CMD, Oriental Bank of Commerce and RK Bakshi, executive director, Bank of Baroda, said efforts were being made to recover the loans to realty companies. A senior SBI official requesting anonymity told FE that the bank has taken action under the Sarfaesi Act which empowers the banks to seize and sell assets in case of defaults to recover their dues.

No confirmation of the banks' move was available from the real estate companies.

We have sent notices to five-six real estate companies and asked them to repay our entire outstanding amount within 40-50 days. A majority of such accounts are related to IT parks and located at places like Bangalore, Hyderabad and Mumbai, said Narendra adding that although proposals for the second time restructuring of these loans have been made, the bank wont relent. IOBs total exposure to the real estate sector is at Rs 1,984 crore, which is 2.19% of the banks loan book. The bank has restructured accounts valued at Rs 658 crore.

Pydah said that the bank has restructured the real estate sector accounts to the tune of Rs 6,000 crore since 2008-09. Out of them a sum of Rs 560 crore has already turned NPA. We are taking measures to recover our loans, said Pydah.

RK Bakshi, ED, BoB said, This is the one sector where bubbles can build up very fast. It is a very sensitive sector and hence we are now cautious towards this sector and are taking steps to recover our loans. BoBs total exposure to the real estate sector is merely 3% of its entire loan book having a size of Rs 1.56 lakh crore. A senior official of BoI, requesting anonymity states that the bank is currently busy taking measures to recover its real estate loans

We are doing them through legal action, negotiation and one time settlement. Ultimately, our aim is to recover our money, said the official.

The bank with a total real estate exposure of Rs 19,500 crore has restructured a total amount of Rs 10,348 crore as on December 31.