Banks double down on home loan segment
Indian banks are jostling to disburse home loans, having tasted success on this front in a tough economy.
The aggregate home loan portfolio of banks grew 9.1% in the year till March 26 to ₹14.59 lakh crore. While this was lower than the 15.4% growth seen a year ago, it marks an improvement after the plunge in the first few months of the pandemic.
Senior bankers attributed the growth in home loans to low interest rates and the shift to remote working. As work-fromhome becomes the norm, people can buy houses far from expensive office centres. Banks are increasingly focusing on the segment, sensing the opportunity and realising the need for more secured loans on their books.
After the collapse of DHFL, there has been a stronger movement of home loans towards banks, CS Setty, a managing director at State Bank of India (SBI), said. The central bank had referred DHFL to the insolvency tribunal in November 2019, following mounting stress at the mortgage lender. The Piramal group recently won a bid to take over the lender and is now awaiting regulatory clearances. “So, it is a combination of banks willing to do more secured loans, and the underperformance of some of the major nonbanking financial companies (NBFCs) has led to an increase in the portfolio of bank home loans. This asset class will definitely be pursued by everyone as they see value and security in it,” Setty said over the phone. SBI has a 35% share in home loans among all commercial banks. The lender, which has a home loan portfolio of ₹5 lakh crore, plans to double it in the next five years.
At private sector lender Axis Bank, home loan disbursements jumped 73% year-on-year (y-o-y) as of March 31, the sharpest disbursement growth within the secured segment. “Our home loan logins and disbursements for Q4FY21, touched highest ever quarterly numbers, driven by improved rigour and rhythm and reduced turnaround times as a result of project initiatives,” Amitabh Chaudhry, chief executive, Axis Bank told analysts on April 27.