LOW-COST HOME LOANS RISKIER: STUDY

Mumbai, Feb. 28: Even as government policies give huge thrust to affordable housing, data reveals elevated risks in the segment for lenders because of a higher propensity among the borrowers to default.

As against 1.96 per cent of overall home loans not repaid for over 90 days, the same for loans under `25 lakh, classified as affordable housing, was 2.33 per cent as of November, a report by Crif Highmark said on Wednesday.

In case of home loans under `10 lakh, where the average ticket size is `8 lakh, the 90-day overdue loan repayments stand at 4 per cent, twice that of the industry average, it added.

At `7.79 lakh crore, affordable housing accounts for 50 per cent of the overall home loans of `15.8 lakh crore.

As more banks take refuge in the sector considered more resilient in times of piling non-performing assets, the banking system’s home loans outstanding has increased 13.6 per cent since April alone.

As the government seeks to meet its target of housing for all by 2022, a slew of sops have been given to the affordable housing sector, including inclusion in the mandatory priority sector lending by giving the sector an infrastructure status, introduction of tax benefits under section 80-IA of the I-T Act, concessions on LTCG tax provisions, etc.

Foreign banks are the most affected in the sub`10-lakh category with bad loans of 16.20 per cent. Even though MNC lenders account for a small portion, they have the highest stress among all, it said.