For banks, home loan portfolio is losing sheen
The housing segment has been seeing a steady decline in growth rate over the last one year
Jan 13, 2015
Source : The Hindu BusinessLine

 

The retail loan portfolio of banks is seeing a marginal shift away from housing and towards unsecured and consumption-based lending.

This is because the housing segment has been seeing a steady decline in growth rate over the last one year.

Reserve Bank of India data show that the pace of growth of home loans declined to 16.4 per cent in November 2014, from 18.1 per cent in the year-ago period.

On the other hand, growth in consumer durables and other personal loans improved to 46.8 per cent (32.8 per cent in the year-ago period) and 16.2 per cent (13.3 per cent), respectively.

“Home loans constitute about 50 per cent of the lending business.

“Though the business is here to stay due to its long duration and sticky nature, there are short-term fluctuations which will happen…The RBI data show that housing has had the lowest growth rate in recent months,” said Jairam Sridharan, Head - Consumer Lending and Payments, Axis Bank.

The offtake of home loans has been slow due to affordability issues and anticipation of correction in housing prices. According to a report by Kotak Institutional Equities, the housing loan segment is a low-margin business and vehicle loans offer slightly better yields, but after adjusting the cost of acquisition and duration of loans, it is not highly profitable. Hence, banks are expected to look at new opportunities to improve profitability.

Loan mix may change

According to the report, a big area would be unsecured loans, as the contribution to profitability is far better than retail loans. It expects the loan mix to change, with used-vehicle financing and loans against property garnering a bigger share.

Pralay Mondal, Senior Group President (Retail & Business Banking), YES Bank, said, “There will be a balancing. Affordable housing is likely to grow primarily due to changes in the Land Acquisition Act and as interest rates are expected to come down.”

Personal loans and credit cards segments are expected to continue growing at 20-25 per cent a year.

Latest Realty News

Residents up in arms over illegal construction
Jan 12, 2015
CHENNAI: Residents of Kalaimagal Nagar in Kolathur are up in arms over illegal construction of a balcony which is encroaching on the public road
Soon, no residences in Bengaluru's industrial zones
Jan 12, 2015
BENGALURU: Industry bodies don't want residential structures to come up on land earmarked for industry
Nine landowners control a fifth of Mumbai's habitable area
Jan 12, 2015
MUMBAI: Who owns Mumbai, a city where land is scarce and where every square foot of space fetches a huge premium?
Foreign investors add Indian online property portals to shopping cart
Jan 12, 2015
NEW DELHI: Indian businessman Navin Bhartia's Internet habits make him a dream customer for billionaire foreign media moguls like Rupert Murdoch
Poor land valuation resulting in black money in Delhi: CIC
Jan 12, 2015
NEW DELHI: Difference in real value of land and circle rates in the national capital is not only facilitating black money inflow in the property market but also causing revenue loss to the exchequer
CBI mulling option of closing probe into Tata-Unitech deal
Jan 12, 2015
NEW DELHI: After re-opening a probe into whether funds from the Rs 1,700 crore Tata Realty-Unitech land deal were diverted for spectrum purchase, the CBI is mulling the option of closing the case again
Cidco earmarks over 500 social facility plots
Jan 10, 2015
NAVI MUMBAI: City and Industrial Development Corporation (Cidco) has earmarked over 500 plots for building working women's hostels, day care centres for children, schools, old-age homes and hospitals
Gogoi not to back Centre on new land rules
Jan 10, 2015
GUWAHATI: Chief minister Tarun Gogoi on Friday strongly opposed the Centre's decision to amend the Land Acquisition Act
Plea for independent body to monitor Bihar govt land
Jan 10, 2015
PATNA: Bihar's former additional chief secretary K B Saxena has underlined the need to set up an independent body for managing and monitoring the government land
Noida land cheat still in his post, no FIR filed yet
Jan 10, 2015
NOIDA: No action yet against Noida Authority employee Nitin Rathi, who was accused by more than 60 people of hoodwinking them into buying fake plots

Latest Realty News Of State

Realty Talk's