The real estate developers in the country are finding it difficult to get funds amid the slowdown. Although the government has been announcing measures to boost the housing activity and help the realty firms to revive the demand, PSU banks are yet reluctant to lend to the real estate developers.

Banks are turning risk-averse at this time of slowdown and thereby demanding on more collateral if they are extending the loans to these developers. They are asking for as high as 150-200% collateral value against the loans.

Many real estate developers have asked as many as five to seven banks to funds their projects but success looks bleak. A senior consultant in the industry said that if the situations do not improve then the big realty firms will soon collapse.

"May be that we will be the trigger for the housing sector. Developers, who till now have been showing discounts on paper, may then actually cut prices for their survival. The next two quarters are crucial not only for the realty sector but also for the Indian economy," he stated.

One of the another major reason for banks turning hesitant in funding the real estate developers is that the falling market valuation in the past one year. The stock prices of all major real estate players such as DLF, Unitech, Housing Development & Infrastructure Ltd (HDIL), Indiabulls Real Estate, Puravankara Projects, Parsvnath Developers, Sobha Developers, Omaxe, Mahindra Lifespace Developers and Ansal Properties & Infrastructure have all fell down by more than 60% in the last nine months.

CEO of Alpha G Corp, S K Sayal said: "With significant pressure on realty companies, they are likely to go for restructuring and focus on selective projects in the short to medium term. There will be more tie-ups at the project level. In fact for the developers, these will be testing times that will check whether they are strong enough to weather the downturn."

Meanwhile the Executive Director of Oriental Bank of Commerce, S C Sinha informed that they have not refused on extending finance to real estate. "It's not that we have stopped lending to real estate companies but we are over-cautious. We are not lending to any new players but funding to our existing clients only. We are selective in our approach, as lending to this sector is a risky proposition in the current scenario," he said.

Even UCO's Bank CMD, SK Goyal agrees with Sinha's view. "We are funding very selectively," he said.