India’s nascent and relatively isolated financial markets have been spared the worst of the credit crunch but leading corporates are feeling the squeeze in other ways.
Real estate is one of the sectors that has been hardest hit – rising interest rates haven’t helped, but Indian banks are increasingly chary of lending to a market increasingly viewed as far too risky in an increasingly conservative world.
"Nothing has really changed much for us," says Baba Kalyani, the chairman of Bharat Forge, one of India’s largest auto component makers, with operations in India, the UK, Germany and North America. "The real change has been in areas where the risk levels are higher, particularly mortgages, housing, real estate. Real estate has certainly been hurt harder here."
Saurabh Chawla, a senior vice-president of finance at India’s largest real estate firm, DLF, says that there is a "general shortage of money available [to property firms] these days".
Overpriced and overheated
Once keen to lend to property firms, India’s banks now see the domestic real estate market as overpriced and overheating, and in a globally cautious market are leading the charge away from property firms.
