NPAs Declined in All Housing Loan Categories..!

Housing loan takers have brought cheer to public sector banks this year (2012).

The first six months figures show that total outstandings reached almost 96% c of 2011-12  figures and more than that in the entire 2010-11.

Most importantly, NPAs (Non-performing assets) have declined in all housing loan categories, at a time when overall NPAs are rising alarmingly.

This trend is evident from the figures compiled by the Finance Ministry for the review meeting on the performance of public sector banks, chaired by Finance Minister Mr. P. Chidambaram on November 15, 2012.

A senior bank official said the increase in housing loans could be attributed to two main factors: reduction in interest rate & in EMIs (equated monthly instalments).

Home Loan Five categories..!

Normally, housing loan data are collated under 5 (Five) categories:

1. up to Rs. 2 lakh

2. Rs 2 lakh to 5 lakh

3. Rs 5 lakh to Rs. 10 lakh

4. Rs. 10 lakh to Rs. 25 lakh

5. Above Rs. 25 lakh.

Among these categories, the maximum loan is given in the Rs. 10 to Rs. 25 lakh category. However, in terms of NPAs, loans up to Rs. 2 lakh contribute the maximum.

Finance Ministry data show that NPAs have come down in all categories, but most prominently in loans up to Rs. 2 lakh.

Bankers said, ''Now there was more focus on personal contact with home loan borrowers"

Govt Bank managers have been asked to reach every borrower to see how loan outstandings can be settled.

Mr. R.K. Dubey, Executive-Director, Central Bank of India, said. ''It can be done either through one time settlement or / extended tenure.''

Three Pronged Strategy..!

Meanwhile, a three (3) pronged strategy has been proposed for boosting housing loans. These include ensuring extended benefits to all eligible beneficiaries under the 1% interest subvention scheme, for which Rs. 400 crore has been provided.

The Finance Ministry expects that the entire budgeted amount will be utilised as over Rs. 200 crore has been distributed so far.

Credit Risk Guarantee Fund Trust..!

Another significant component of the strategy is the CRGFT (Credit Risk Guarantee Fund Trust), launched last month (2012 October)  by Housing and Urban Poverty Alleviation Minister Mr. Ajay Maken.

The fund provides guarantee up to 90% of the amount in case of default on home loans up to Rs. 2 lakh & 85%in defaults of Rs. 2 lakh to Rs. 5 lakh.

Src: The Hindu

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