Bad mortgages may rise marginally: Parekh

Indian lenders may face "marginally" more bad mortgages because of higher interest rates, Deepak Parekh, chairman of Housing development Finance Corporation, said today in Mumbai.

Banks have raised lending rates three times since the beginning of the year. The central bank has increased its key overnight lending rate seven times since October 2005 to 7.75 per cent, and raised its cash reserve ratio three times since December, to slow the fastest pace of loan growth in more than 35 years.

Industrywide, bad loans may go up "marginally", Parekh said, clarifying in response to a question that Housing Development's bad loans hadn't risen. "I think we have the resilience to withstand that," he said.

Home mortgages form about half of all loans most banks give to individual borrowers, Moody's Investors Service said in a report yesterday.

ICICI Bank and HDFC Bank, the biggest non-state-run banks, make more than half their loans to individuals, while State Bank of India, the nation's biggest, extends about a quarter of its loans to this segment.

Housing Development will wait until July 31 for the central bank to announce its quarterly assessment of the economy before deciding on its lending and deposit rates, Parekh said.