A major financial group has decided to fund real estate projects through the alternative investment fund (AIF) route and syndications, shifting away from its earlier on-balance-sheet lending model. During an investor call, senior leadership stated that the group will establish a strategic AIF focused on land and approval financing, leveraging existing client relationships to channel funding.

The group plans to transition toward an investment banking–led distribution and syndication model, noting that real estate developers now find it easier to obtain early-stage funding from AIFs rather than non-banking financial institutions.

The organisation is looking to realign its wholesale credit businesses, which include real estate, bespoke financing, distressed credit, and financial institution lending. Its wholesale lending book declined to ?4,917 crore as of March 31, a 42% drop from ?8,445 crore a year earlier.

According to the company, several factors contributed to this strategic shift. Increased competition from banks has reduced yields across key client segments, while regulatory uncertainties around land financing have added pressure. Newly proposed regulations may raise provisioning requirements for real estate and infrastructure finance to 5%, up from 0.4%, affecting returns on both new and existing loans.