Sunil Jain: Real estate, not housing

While the RBI has increased the risk weighting on lending to real estate "� standard provisioning on housing remains the same one per cent while that on real estate has doubled to two per cent "� a recent report from Deutsche Bank suggests the banking system's exposure to real estate is actually quite low. In which case, there may not really be any serious threat of any meaningful loss due to defaults. While the banking system's exposure to the housing market rose from 3.4 per cent of the total outstanding in March 2001 to 11.3 per cent by June 2006, the exposure to real estate rose sharply but still remained just 1.6 per cent of the total loan portfolio.
 

Still not a problem
	Mar- 01	Mar- 02	Mar- 03	Mar- 04	Mar- 05	Mar- 06	Jun- 06
Total bank loans  (Rs bn)	4,692	5,367	6,169	7,644	10,409	14,458	15,232
Housing  (Rs bn)	161	224	347	520	1,287	1,864	1,719
Housing  (% of total loans)	3.4	4.2	5.6	6.8	12.4	12.9	11.3
Real estate loans (Rs bn)	17.7	26	31	55.8	106.1	266.8	236.3
Real estate loans (% of total loans)	0.4	0.5	0.5	0.7	1	1.9	1.6
Source: Deutsche Bank