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RBI Raises Interest Rates for SEZ lending.

September 21, 2006

SEZs which were taking shelter under infrastructure projects have now been classified as “Commercial Real Estate” projects with immediate effect due to the fact that most of them are Land Bank Scams and not really promoting the industrial and manufacturing activity as essential for the nations development. Commercial Real Estate is classified under high-risk lending by global financial institutions. Implies direct hit on the bottomline of SEZ companies.

Here is an exclusive coverage on the implications of SEZ being classified as commoner’s Real Estate projects and also other SEZ developments in India. Recall IMF chief had slammed the Indian Government for its SEZ policy which was not encouraging industrial activity in remote areas leading to uneven development patterns in the nation.

Banking stocks with huge exposure to commercial real estate are likely to be affected. ICICI Bank and Punjab National bank are the most vulenarable. So the next time when you want to BUY stocks because of the grand SEZ scheme, it may really turn out to be a nightmare. Just be cautious with stocks of Land Bank Saga!!!

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