 "Housing loan pangs for public sector banks")
According to data from the Reserve Bank of India (RBI), the personal loan portfolio of all banks stood at Rs 14.4 lakh crore at the end of June 2016. Of these, housing loans account for a 54 per cent, or Rs 7.73 lakh crore, up from 49 per cent in 2008. But, small housing loans, which are typically those under Rs 2 lakh, are likely to account for only a fraction. Thus, defaults in aggregate terms in this segment are likely to be of a much lower magnitude.
And, while loans to the housing segment have grown at a robust pace — 18 per cent in June 2016 — it doesn’t seem to be an outlier. Similar growth rates are observed in other segments. Vehicle loans, which account for 11 per cent, grew at a healthy 20.7 per cent, while credit card debt has grown at a staggering 29 per cent. Other personal loans have grown at 23.6 per cent.
What is surprising about the growth of housing loans is that it comes against the backdrop of various reports and commentary pointing to a lull in the residential real estate market. Perhaps low-cost housing is driving demand.
On the rise in NPAs in this segment, while there is good reason to fret, it is early to be worried. As analysts point out, retail loans generally tend to have lower default rates.