State Bank Of India (SBI) move to freeze its new home loan rates at 8 per cent for a year is too little, too late and will not have any immediate positive impact on prices of interest rate-sensitive sector stocks, believe market players. In fact, banking stocks could face the music on bourses as a consequence of this move, says leading stock broker Ramdeo Agarwal of Motilal Oswal Financial Services.

“The loan profitability of SBI may be impacted as a consequence of this decision. The move shows that banks are under pressure and there is no growth in the business,” says Agarwal. In the domestic market, real-estate sector stocks have declined by 80-90 per cent since January 2008 following a drop in home sales. Even benchmark real-estate stocks like DLF and Unitech have declined by 70-80 per cent, while benchmark indices Sensex and Nifty fell by 60 per cent during the period.


In a brainstorming session on ‘Opportunities and Challenges in Finance & Banking for Real Estate Sector’ on Wednesday, banking experts told real estate developers to realise their social responsibility of providing affordable housing to the masses. Held under the aegis of the Gujarat Chamber of Commerce and Industry (GCCI) and Gujarat Institute of Housing and Estate Developers (GIHED) at Hotel Grand Bhagwati, stress was also laid on providing cost-effective housing for the low income groups, as this had remained largely unexplored.

According to GIHED vice-president Suresh Patel, a developer, this was because in the boom period of the last four years, majority of big players had worked towards meeting the needs of only top 12 per cent of the market. He felt affordable housing at lowest rate was possible. He wondered how ‘board room analysis’ by bankers born in the 1980s could decide the fate of a 50-year-old sector. The good repayment figures shown by these bankers to prove their banking prowess could not be taken at face value because of limited exposure, he said.



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