SBI to revisit policy on construction finance for housing projects, says chairman

State Bank of India (SBI) Chairman C S Setty
| Photo Credit:
PTI

State Bank of India (SBI) Chairman C S Setty announced on Saturday the bank’s plan to reevaluate its construction finance strategy for residential real estate. He emphasized that accountability and transparency would remain central to its lending decisions.

Currently, SBI has minimal involvement in residential project financing but is steadily expanding its commercial real estate portfolio, particularly in office space developments.

Setty highlighted the bank’s cautious approach, noting historical challenges in the residential sector. “Many lenders faced significant losses due to overly aggressive financing in the past,” he remarked. He advised developers to prioritize financial stability and risk management to secure favorable terms.

“Transparent project execution and accountability will build lender confidence and lead to more accessible financing solutions,” he added, addressing an event organized by real estate body CREDAI.

For commercial projects, Setty outlined prerequisites: developers must demonstrate pre-leasing commitments for at least 40-50% of proposed office spaces to qualify for financing. “Unoccupied buildings pose risks we aim to mitigate,” he stated.

On interest rates, Setty clarified that SBI’s construction finance rates align with its Marginal Cost of Funds-Based Lending Rate (MCLR), which adjusts periodically based on deposit rates. The bank recently updated its MCLR and select fixed deposit rates.

He also urged housing finance NBFCs to optimize operational efficiency to offer more competitive loan rates, benefiting borrowers.

Published on December 20, 2025