Why will banks lend more to realtors in times of accelerating slowdown?

Expect the markets to take the Reserve Bank of India’s (RBI) persuasive moves on Saturday to direct lending to real estate sector with a pound of salt.

The simple point being, when current loans are under distress, why will banks lend more to realtors in times of accelerating slowdown?

Also, all the measures announced are prospective, so any benefits that will percolate will only be through incremental lending — if it happens.

Nevertheless, here’s a quick check on the likely impact of RBI’s moves: Risk weights on bank exposure to the real estate sector and non-deposit taking NBFCs reduced from 150% to 100%.

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