New
Delhi: Concrete evidence is emerging that the rate
of growth of home loans is slowing down in public sector
banks.
These
banks which saw loan disbursements grow by over 40 per
cent in the two years before fiscal 2006-07 saw a growth
rate of 21 per cent in 2006-07. The portfolio grew from
Rs1,11,639 crore to Rs1,35,052 crore, according to information
available from sources in the finance ministry.
This
is in stark contrast to a more than 100-per cent rise
over a two-year period between 2004 and 2006 that saw
the home loan portfolio move up from Rs53,737 crore to
Rs1,11,639 crore.
Official
sources said seven banks had registered over 30 per cent
increase in their home loan portfolio during the 2006-07
fiscal. Bank of Baroda saw a 38-per cent rise in its portfolio
last year compared to the previous year.
A
few smaller banks such as Dena Bank (59 per cent) and
United Bank of India (46 per cent) recorded much higher
growth rates than the rest.
Banking
industry sources have for some time been cautioning that
a combination of rising interest rates, high cost of real
estate (which however has shown some signs of coming down
from the year-high perch) and higher margins in bank loans
would slow down growth in home loan portfolios.
The
government has on its part been keen that the impact of
high interest rates should somehow be softened on the
small and medium borrowers.
Finance
minister, P Chidambaram had recently asked the chief executives
of public sector banks to protect the interests of borrowers
in the Rs8-10 lakh category to the extent possible.
Second
home loans may cost more
At the same time, banks are considering higher charges
for those seeking loans for a second home or those costing
above the Rs15-Rs20-lakh limit.
The
largest private sector lender, ICICI Bank, is considering
charging more for loans for second homes. The bank is
already discouraging second homebuyers with credit norms
being tighter for this category.
At
present ICICI Bank charges 12 per cent for home loans
of Rs15 lakh and above. Union Finance Minister P Chidambaram
had also called upon banks to curb retail loans. The realty
sector had witnessed a steep rise in valuations, which
some analysts described as unsustainable.
However,
following a series of rate hikes combined with a 1.50
per cent increase in CRR limits in three phases effected
by the RBI since November last, credit flows to sensitive
sectors are beginning to witness a slowdown.
While
first-time and home loan borrowers for self use are unlikely
to be affected by differential rates in case banks decide
to implement such a move, those going in for second homes
will definitely find their costs rising.
However,
the efficacy of this move in preventing speculation in
the realty sector will depend upon the banks'' ability
to ascertain whether a loan sought is for the first time
for self use or for a second home. Banks will now have
to conduct this exercise diligently in line with the RBI''s
policy to check retail loans.
|