The State Bank of India (SBI) has crossed the Rs 5-lakh crore mark in the home loan business and expects to double the size of its portfolio over the next five years, chairman Dinesh Khara said on Wednesday. The bank is gearing up to adopt the co-lending model for home loans, which will help boost its footprint in the unorganised sector.
Khara said while the book had grown to the current level from less than Rs 1 lakh crore in 2011, the pace of growth from here on would be much faster. One of the reasons being the definite change in the country’s demographic, with the younger generation looking to acquire homes at a much younger age, as compared to what it was 10 years ago.
“We have observed that 42% of our home loan customers are from the age bracket of below 40 years. I feel that going forward, we will see a much greater shift in this direction and the increase in earnings of the younger generation, their aspirations and the concept of nuclear family are going to be the contributing reasons for people to apply for homes at an early age,” Khara said, adding, “If I may hazard a guess, I would say that maybe in five years (the portfolio will double), not 10 years.”
SBI is extending builder loans and also approving their projects in anticipation that offtake will improve. When it comes to builder-approved loans, its turnaround time is about five days. Khara said the bank has a market share of about 35% among all scheduled commercial banks and going forward, home loans will be a major focus area for the lender within the retail segment. SBI is also looking to implement artificial intelligence (AI), cloud, blockchain and machine learning, which can play a pivotal role in propelling not only the home loan business, but also other businesses.
He sought to allay concerns about the quality of retail loans at a time when job and income losses have plagued a fairly large segment of the population. The home loan portfolio’s gross non-performing asset (NPA) ratio is at 0.67-0.68%. Of 39 lakh-odd borrowers who were eligible to be considered under the Reserve Bank of India’s (RBI) restructuring plan, only about 10,000 customers have actually availed the restructuring option, which aggregates to about Rs 2,500 crore. “So if we look at a book size of Rs 5 lakh crore, out of that only Rs 2,500 crore has been put through restructuring. These two parameters give a very clear reflection about the quality of the book which we have,” Khara said. He pointed out that 72% of SBI’s customers are in the salaried bracket and are in a position to honour their commitments pretty well.
Of the Rs 5-lakh crore portfolio, home loans account for Rs 4.86 lakh crore and builder finance is about Rs 11,000 crore. About 2 lakh customers have been extended loan facilities in the affordable segment.
The bank has been seeing a trend of balance transfers of home loans, even as pool purchases have nearly halted. “Metro locations are normally very sensitive to interest rates and we have been successful in having about 23% of Rs 5 lakh crore on account of takeover. For more than a year now, we have not been making pool purchases. Whatever pools we had purchased, that is also coming down. So it’s about Rs 4,000 crore,” Khara said.