Housing finance companies (HFCs) grew their mortgage portfolios at a faster rate than banks in the year up to March 31, thereby increasing their market share to 31 per cent, according to a study by Icra.
According to its estimates, the total housing credit outstanding in India as on March 31 was Rs 4,31,300 crore, as against Rs 3,82,900 crore as on March 31, 2009, growth of 13 per cent.
The housing loan portfolios of HFCs as a whole reported a growth of 21 per cent during 2009-10, higher than the 10 per cent growth reported by commercial banks. With that, the share of HFCs in the mortgage market increased to 31 per cent as on March 31, from 29 per cent as on March 31, 2009
Vibha Batra, Senior Vice-President and Co-Head, Financial Sector Ratings, said, “HFCs continue to maintain superior asset quality vis-à-vis public sector banks (PSBs). The top five PSBs had a gross non-performing (NPA) percentage of 2.6 per cent in their housing finance book as on March 31, against which HFCs had 0.9 per cent. Credit provisions were low for HFCs at 0.07 per cent of average advances during 2009-10.”
HDFC, State Bank of India (SBI), ICICI Bank and LIC Housing Finance (LIC HFL) dominate the domestic mortgage market, together accounting for 55 per cent of the total housing credit in India as of March 31, the report said.
Credit growth in the Indian mortgage finance market improved to 13 per cent in 2009-10 from 10 per cent in the previous financial year. This was partly on the strength of an improved operating environment and expectations of appreciation in property prices and partly on account of the attractive interest rate schemes offered by both banks and HFCs. The “8 per cent home loan scheme” that was initially launched by State Bank of India in August 2009 to benefit home buyers during the festive season forced other lenders to launch similar products. While most withdrew the scheme by March, some large players have extended it to June.