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State Bank of India has announced plans to reassess its construction finance policy for residential housing projects to strengthen lending support while managing risk more effectively. The lender's chairman has said the review will focus on enhancing accountability, transparency and project governance as key criteria for financing decisions. While SBI currently has minimal exposure to construction finance in the residential segment, it is exploring ways to structure and price credit that better reflects project viability and market dynamics.
State Bank of India has said it will revisit its construction finance policy for residential housing projects, aiming to refine how it extends credit in this key real estate segment. The review will centre on strengthening due diligence, accountability and transparency measures that underpin lending decisions, with the objective of supporting more disciplined and sustainable credit flows to developers. Advertisement
SBI's involvement in construction finance for housing has historically been limited compared with its broader commercial real estate exposure. To address this, the bank plans to enhance its assessment frameworks, placing greater emphasis on project governance and risk-management practices as prerequisites for financing. Clearer criteria are expected to help improve lender confidence and create a more robust environment for construction lending in the residential sector.
The policy reassessment is also expected to influence how construction finance is priced and structured, aligning loan terms more closely with market realities and developer capabilities. By doing so, SBI aims to support viable housing projects while maintaining prudent lending standards.
In parallel, the bank has highlighted that interest rates on construction finance will be linked to its benchmark lending rates, ensuring consistency with broader funding costs. These adjustments form part of a broader effort by lenders to strengthen credit discipline in the real estate sector, balancing growth objectives with risk management.
Officials have indicated that, as part of this review, SBI will continue to engage with market participants to refine its financing approach, ensuring that structured credit products can effectively support residential development while safeguarding institutional balance sheet quality. The move reflects a broader trend among lenders to adopt tailored financing frameworks that align sector growth with sound lending practices.
Source: PTI
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