Citibank, StanChart real estate exposure doubles in 2004-05

Lending to real estate sector by two leading foreign banks in India more than doubled in 2004-05. Real estate is one of the three sectors considered to be sensitive for the banking sector. Capital market and commodities are the other two sensitive sectors.

Citibank lent Rs 1,262 crore to the real estate sector in 2004-05, up 117 per cent from Rs 582 crore in 2003-04. Advances to real estate sector by Standard Chartered rose 145 per cent to Rs 525 per cent in 2004-05 from Rs 215 crore in 2003-04.

The Reserve Bank of India (RBI) last week increased the risk weight for credit risk on exposures to real estate and capital market to 125 per cent from 100 per cent. The central bank's attempt is to shield banks from the booming real estate prices and the spiralling stock market. The recent sharp rise in real estate prices, particularly in Mumbai, is feared to be a bubble. 
 

Lending to sensitive sectors                                          Rs cr
	2003-04	2004-05
Citibank
Real Estate	582	1262
Capital Market	202	227
Commodities	309	131
Standard Chartered
Real Estate	214	552
Capital Market	203	148
Commodities	84	92

A Standard Chartered official said the bank is a very small player in lending to the real estate sector with just a single digit market share.

The biggest player in real estate funding is Housing Development Finance Corporation.

Standard Chartered's real estate exposure includes Rs 196.45 crore lent to land and building developers and Rs 170.98 crore for mortgages other than individual housing loans. Advances of both the banks to the capital market sector in 2004-05 remained nearly at the same level as in 2003-04.

Citibank's advances to capital market in 2004-05 totalled Rs 227 crore against Rs 202 a year earlier. Standard Chartered's lending to the capital market was Rs 40.96 crore in 2004-05 against Rs 40.43 crore a year earlier.

Advances by Citibank to the commodities sector, the third sensitive sector, jumped 324 per cent to Rs 131.3 crore in 2004-05 from Rs 30.9 crore in 2003-04. For Standard Chartered, advances to the commodities sector was up 9 per cent to Rs 92.10 crore from Rs 84.37 crore in 2003-04.

Standard Chartered Bank has reported a 0.86 per cent rise in net profit from Indian operations in 2004-05 to Rs 601.59 crore from Rs 596.46 crore in 2003-04. Its total income was down to Rs 3,018 crore in 2004-05 from Rs 3,222 crore in 2003-04.