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A Realty Check on The Banks
Nov 16, 2016

One of the biggest sectors likely to be hit by the demonetisation drive is real estate. With the sector largely thriving on cash transactions, the huge hit on high denomination notes is expected to bring in the much needed curbs on such deals. Therefore, it is no surprise that realty stocks have been pummeled on the bourses.

Banks have benefitted from the surge in deposits due to limits on the amount of money that can be withdrawn with the balance getting deposited in the account. Moreover, rising financial inclusion has also contributed to the growing deposit base of banks. However, banks having exposure to commercial real estate are also likely to face the music from the government's crackdown on black money.

Among banks, Yes Bank has the highest share of exposure to commercial property at 6.8%. However large private sector banks such as Axis Bank, ICICI Bank, and HDFC Bank have shares of 4.3%, 3.2% and 2.2%, respectively. Largest bank State Bank of India has a miniscule 0.9% share of exposure to commercial real estate.

Data Source: Business Standard, CLSA Report

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