Realty stocks "co-operate"

Usually, after an RBI policy where interest rates are hiked, the realty sector tanks because EMIs become costlier and with more rate hikes in the pipeline, the reaction would have been negative.

This time around, this negativity has been buffered by giving sops to co-operative banks lending.

In the policy, the limits for individual housing loans extended by urban cooperative banks and district cooperative banks have been revised by over 100%.

With this change, limit for individual housing loans for Tier-I urban cooperative banks doubles from Rs.30 lakh to Rs 60 lakh and for Tier-II, it goes up from Rs.70 lakh to Rs.140 lakh.

In case of rural co-op banks with assessed net worth less than Rs 100 crore, limit is hiked from Rs.20 lakh to Rs.50 lakh and for those with net worth more than Rs.100 crore, limit jumps up from Rs.30 lakh to Rs.75 lakh.

This apart, cooperative banks have been permitted to extend finance to commercial real estate-residential housing, with in the existing housing finance limit of 5% of total assets.

These moves are expected to improve credit flow to the sector and also increase demand, mitigating the impact of higher interest outgo.

Realty stocks – Oberoi Realty, DLF, Sobha, Macrotech, Brigade Entp, Sunteck, Godrej Prop, Phoenix Mills, Kolte-Patil, all are up in the green.