High-pitch loan push spells festivity for banks

The tremendous push by banks to sell retail loans during the festival season appears to have paid rich dividends.

In October alone, the retail loans book of State Bank of India (SBI) rose by Rs 1,800 crore, double the monthly figure, while ICICI Bank's has expanded 25 per cent jump. Punjab National Bank (PNB), it seems, is continuing to ride the retail wave.

The three banks had unveiled a festival bonanza on retail loans, effectively supported by an advertisement blitzkrieg. The offer came just ahead of the latest round of hike in the home loan rates. The aggressive strategy helped each of them grow its market share.

During the Dussehra season, SBI had come out with a 7.25 per cent floating rate offering for home loans.

Out of the retail loan book growth of Rs 1,800 crore, Rs 1,000 crore consists of home loans. In addition to the attractive scheme, October, typically, is considered an auspicious time for buying new homes.

The bank's retail book has grown from Rs 33,000 crore to Rs 40,000 crore from the start of this fiscal year. The targeted growth for the year is Rs 11,000 crore, which is likely to be overtaken.

"We are likely to grow our retail loan book by Rs 13,000-14,000 crore this fiscal year," said the official. SBI's housing portfolio stood at Rs 21,600 crore at the end of October.

With 7 per cent floating rate home loan for all tenures, ICICI Bank disbursed Rs 1,800 crore of home loans during October. "We saw a good 20 per cent jump in our mortgage loans and all other retail loans during the festival season. Our credit card spends also shot up by 15-20 per cent," said V Vaidyanathan, senior general manager-retail, ICICI Bank.

The largest private sector bank's retail loans book expanded by Rs 3,960 crore in October, compared with a typical monthly growth of Rs 3,300 crore.

Punjab National Bank disbursed Rs 474 crore worth of loans during October. "The festival offer is still on and we plan to disburse around Rs 900 crore by December 1," said a senior official from PNB.

The bank aggressively slashed its rates by as much as 1.25 per cent to offer floating rate home loan rates at 7.75 per cent. It has also snipped its car loan rates to offer loans at 8 per cent.