Loan offtake for low-cost housing falls in 2012

Nearly 60 per cent of home loans from banks goes for tickets of above Rs 10 lakh. Of these, those above Rs 25 lakh account for nearly 23 per cent of the total home loan portfolio of all banks in India.

The latest issue of Trends and Progress in Housing in India 2012 released by the National Housing Bank on Thursday shows low-cost housing is shrinking. Loans up to Rs 5 lakh accounted for 21 per cent of the portfolio of housing loans for banks in 2009-10 but by 2011-12 it has dipped to 14 per cent.

RV Verma, CMD of NHB acknowledged the trend and said one of the reasons why this has occurred is because of the high non-performing assets in this category of loans. The NHB data shows for loans between Rs 2 and Rs 5 lakh, the NPA percentage has averaged above 4.8 per cent, way above the sectoral level of 2.63 per cent in 2011-12.

The numbers show that low-cost housing will need a fresh approach from the government to make a dent in the shortage of housing stock in the country. As per the latest government estimates, the housing shortage in the urban areas is 18.78 million units where 95 per cent of the shortage is in this category.

The finance minister in Budget 2013-14 is expected to provide some directions on this issue. A possible solution offered by the NHB report is expansion of the securitisation market for housing in India, which has been languishing because of legal constraints and high stamp duties besides the absence of players like pension and insurance funds from the market, which can provide long term finance.

The report shows that housing finance companies which account for a third of the market also follow the same trend. Of the 56 companies registered with NHB as on June 30, 2012, 43 per cent of the total housing loans disbursed during 2011-12 are above 25 lakh while approximately 3.30 per cent of total housing loans disbursed are less than 5 lakh.

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