The MCA expressed concerns over the sector's exposure to the NBFCs and HFCs, which is pegged at nearly Rs 1 lakh crore.
The Ministry of Corporate Affairs (MCA) has informed the Prime Minister's Office, the Finance Ministry and the Reserve Bank of India (RBI) that the credit stress in the real estate sector needs to be watched closely.
The MCA expressed concerns over the issue due to the sector's exposure to non-banking finance companies (NBFC) and housing finance companies (HFC), sources told CNBC-TV18.
It added that the sector is going through a difficult phase and banks must be vigilant of any default in the sector, and it must be reported immediately. The ministry wants to avoid negative events in the sector, which could in turn affect the bourses.
This comes months after the crisis at Infrastructure Leasing and Financial Services (IL&FS), when its group companies defaulted on a series of payments.The company owed the banks and other creditors as much as Rs 91,000 crore. This sent shockwaves through the NBFC sector and was followed by a severe liquidity crunch, which had only just started to ease.