As you are aware, there has been substantial
increase in lending by banks to the real estate sector during the last few years.
While the development of real estate is welcome, there is a need for the banks
to curb the excessively risky lending by exercising selectivity and strengthening
the loan approval process.
2. In this context, we advise that while appraising
loan proposals involving real estate, banks should ensure that the borrowers
should have obtained prior permission from government /local governments/other
statutory authorities for the project, wherever required. In order that the
loan approval process is not hampered on account of this, while the proposals
could be sanctioned in normal course, the disbursements should be made only
after the borrower has obtained requisite clearances from the government authorities.
Yours faithfully,
(P. Vijaya Bhaskar)
Chief General Manager