Banker's Fund Warns Indian Realty Bad-Loan Crisis to Get Messier

A realty fund controlled by billionaire banker Uday Kotak wants lenders to acknowledge that they are facing a $65 billion bad-loan crisis in the nation’s real estate sector. Kotak Realty Fund has asked lenders to recognize soured debt and take a haircut on the credit given to apartment builders. That will spur fresh credit and revive cash flow for realty companies, Chief Executive Officer Vikas Chimakurthy said. The $1.8. billion fund hasn’t managed to lend to any of the stalled residential projects because lenders balked at accepting the crisis, he said. The delay is adding to the mounting default risk of developers, with as many as 560,000 homes worth of 4.5 trillion rupees ($65 billion) stuck or delayed across the top seven Indian cities mainly due to the dearth of funds, according to Anarock Property Consultants.