In spite of cheaper loan, home loan growth declined to 5.4%

Although banks are offering cheaper home loan but there are not many borrowers to take loans from banks to buy houses. On the other hand lending to the distressed real estate developers by banks is comparatively high.

By the end of August 2009 the lending to the real estate was high at 41.5% from the previous year. Thus at the end of August 2009, the total commercial real estate loan outstanding amounted to Rs 96,701 cr­ore which is up by Rs 28,353 crore as against the previous year.

A senior public sector banker said, “Banks lent a helping hand to big real estate companies after they got into trouble due to the liquidity crisis when foreign funds suddenly dried up. This was done so that some of the projects do not get stranded”. While, ho­me loans has grown by just 5.4 per cent (Rs 14,668 crore) year-on-year to Rs 29,872 crore.

However year-on-year basis the increase in loans to individuals at the end of August 2009 amounted to just 4.1 per cent in contrast to credit card out standings and consumer durable loans dropped retail loan gro­wth. This supports the sharp down fall in the private consumption demand for the first quarter of 2009-10 as projected in the GDP data.

According to a senior official working with private sector bank, “Banks are re­coiling fr­om unsecured lending. Personal loans and credit cards are now issued only to in-house customers after b­an­ks faced huge delinquencies”.

The credit card outstanding registered a declined growth of 14.3 per cent as the portfolio compressed by Rs 4,167 crore from Rs 7,173 crore in the year-ago period.

On the other hand the consumer durable loans reported a declined growth of 16.7 per cent with the portfolio compressing by Rs 1571 crore. Thus the banking system reported the total credit card outstanding of Rs 24,889 crore.

According to disaggregated data on sectoral deployment of gross bank credit of up to August 28, 2009 projected 53.8 per cent of incremental non-food credit (y-o-y) which was absorbed by industry against the 47.5 per ce­nt in the corresponding period of the previous year. While the agricultural sector rapt around 21.8% of the incremental non-food bank credit as against 8.5% in the corresponding period of the last year.

The loans given to the industry grew by 17.9 per cent the portfolio showing increase by Rs 1,66,121 crore at the end of August 28, 2009 from Rs 2,30,229 crore in the year ago. The personal loan saw a growth by 2.3 per cent with its portfolio moving up by Rs 12,594 crore during this period from Rs 69,763 in the year ago period.

There was sharp growth of 34.5 per cent in the education loan segment with its portfolio growing by Rs 8,217 crore from Rs 6,576 crore in the year-ago period. However growth in incremental credit for services sector depicted a major deceleration. On year-on-year basis it reported a growth of 11 per cent with the portfolio increasing by Rs 62,775 crore at the end of August 2009.

The professional services segment was the most affected segment which reported the growth by 20.5 per cent while the year-ago period it had registered a growth of 64.6 per cent. Transport operators depicted a portfolio increase of 9.1 per cent from 26.3 per cent in the year-ago period.