Public Sector Banks Witness Rise in Home-Loan Defaulters

June 12, 2009	(1 votes, average: 5 out of 5)  Loading ...
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The rate of default in repaying home loan installments in public sector banks like SBI (State Bank of India) and PNB (Punjab National Bank) has gone up in the past six months as compared to private banks. Offering of these loans on a platter in the last six months so that the buying capacity is enhanced in a market beset with slowdown is believed to be one of the main reasons for the rate of defaults. It is much easier to get off the hook if one has a home loan from a public sector bank rather than a private one, it is believed. Going by the increase in default rate by 4% in the past six months in the city for SBI and PNB, the scare of borrowers not repaying their loans in time has shot up.

According to an official in personal loan department of SBI, who refused to be named, “In Haryana region, in Ambala, default has soared to 7% and in J&K, the figure is 15%. Though we have stopped giving personal loans to the non-salaried, we are working on making scrutiny of home loan applicants more stringent.” At the moment, SBI offers loan up to Rs 5 lakh at a rate of 8.5% per annum. Facing a similar situation in the past six months, PNB has accounted for an increase of 10% defaulters. “There has been a rise of 10% in delinquency. However, we are also witnessing an upward trend in home loan borrowers with 8.5% interest up to Rs 5 lakh on fixed loan,” said retail banking incharge official, PNB, requesting anonymity.

In contrast, as regards private banks, where there are strict recovery procedures, default rate has fallen. As an official in corporate communications, HDFC Bank, noted, “Gross non-performing loans which are an index to the default rate, on March 31 this year, amounted to Rs 701.55 crore. This is equivalent to 0.81% of the loan portfolio, the figure at the corresponding period last year being 0.84%.” He added, “The year saw a rise in home loans approvals. They amounted to Rs 49,166 crore this year as compared to Rs 42,520 crore in the previous year, representing a growth of 16%. This was to build up the buying capacity in the market.” ICICI refused to divulge its data on defaulters.

News Published Under:   Real Estate India, Home Loans |

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