HOSPITAL, HOTEL LENDING NOT COMMERCIAL REALTY EXPOSURE

Loans given by banks for building hotels and hospitals may no longer be treated as commercial real estate exposure in the books of the lender, according to draft norms issued by RBI. This would mean that even if the central bank tightens the loan rules for commercial properties, it would not affect
banks' funding for construction of hotels and hospitals. However, loans for setting up malls and office
complexes and any property where the funding takes place against future rental income, would still be classified a commercial exposure. The proposed norms will not immediately impact bank balance sheets since standard provisioning for real estate companies are now on a par with other industries.