SBI Eyes Construction Finance Growth with a Focus on Transparency

State Bank of India (SBI) plans to reevaluate its policy for construction finance in residential real estate, emphasizing transparency and accountability. While SBI's presence in construction financing is limited, it continues to expand its commercial real estate efforts. The bank is focusing on ensuring tenant commitments for office spaces and linking interest rates with Marginal Cost of Funds based Lending Rate (MCLR).

State Bank of India (SBI) Chairman C S Setty announced a reassessment of the bank's approach to residential real estate construction finance, with a strong emphasis on transparency and accountability to determine interest rates.

SBI currently has limited involvement in this sector but is gradually entering the commercial real estate arena, focusing on office spaces. Setty highlighted the importance of tenant commitments, suggesting that developers secure 40-50% commitments to access finance.

Interest rates for construction finance will remain tied to the Marginal Cost of Funds based Lending Rate (MCLR), which was recently adjusted along with fixed deposit rates. Setty also urged non-banking financial companies (NBFCs) to cut operational costs to offer more competitive loan rates.

(With inputs from agencies.)