In addition to its concern about food inflation cascading into a wider increase in prices, the Reserve Bank of India is worried about burgeoning asset prices.The concerns have arisen as both capital markets and real estate prices are looking up.
RBI governor D Subbarao expressed his concerns about the rising real estate prices. “Increasing optimism about the recovery and high levels of liquidity are driving up real estate prices although they are still some distance away from the pre-crisis peaks.”
This could mean that the central bank may raise risk weights/provisioning on bank loans to real estate going forward.
To read more, please, visit Not just food, RBI wary of asset price spiral as well
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