It is been expected that the banks are going to increases the loan rates on the real estate projects. The Reserve Bank of India is likely to make borrowing more costly for builders. It may ask banks to set more capital for loans to the commercial real estate projects.

The higher capital requirement will undoubtedly affect the interest rate. This will force the banks to increase its interest rates on these realty loans.

However, senior bankers are expecting that the Reserve Bank of India can augment the standard provisioning too. Or else it can risk weight on bank loans to real estate companies. As the new policy of RBI is coming on April
20, these things are expected to be there in the policy.

Chairman and Managing Director of Indian Overseas Bank, Mr. SA Bhat has revealed that the RBI may tighten the prudential norms if the raise cash reserve ratio (CRR) is unchanged with the same repo and reverse repo rate. He has also informed that the as on November 2009, the Indian banks are exposed to Rs 88,581 crore to the commercial real estate projects in the country.