SBI to revisit policy on construction finance for housing projects, says chairman

Core Viewpoint - State Bank of India (SBI) is reassessing its construction finance policy for residential real estate, emphasizing accountability and transparency in determining interest rates for such loans [1][3]. Group 1: Construction Finance Policy - SBI currently has a negligible presence in construction finance for housing projects but is gradually building its portfolio in commercial real estate, particularly office spaces [1]. - The bank is working on strategies for construction finance in residential real estate, acknowledging past failures in the market due to overleveraging by aggressive players [2]. - Stability in transparency, project management, and risk management is crucial for gaining lender confidence, which will lead to more affordable construction finance [3]. Group 2: Commercial Real Estate - Developers seeking construction finance for office spaces should secure at least 40-50% commitment from potential tenants [3]. - SBI's interest rates on construction finance are linked to the Marginal Cost of Funds based Lending Rate (MCLR), which is revised in accordance with term deposit rates [4]. Group 3: Recommendations for NBFCs - The chairman advises Non-Banking Financial Companies (NBFCs) in the housing finance sector to reduce operational costs to offer loans at lower rates [5].