Rise in home prices “moderated significantly” in 2015-16 and there is no threat of any systemic risk from the housing sector with the gross NPAs amongst retail loans being contained, the RBI said today.
“With gross non-performing asset (GNPA) ratio around 1.3 per cent, the retail housing segment does not presently pose any significant systemic risk in the Indian context,” RBI said in the latest Financial Stability Report (FSR) it publishes for the Financial Stability and Development Council (FSDC).
Compared with the overall GNPA ratio of 7.6 per cent for the entire banking system as of March, the stress in the retail loans is very low, which also explains banks’ eagerness to tap into this segment, it said.
Following the 2008 financial crisis, which was traced to the housing bubble in the US, the regulatory vigil against potential risks has been increased.
The FSR said that apart from the catalytic role of the housing sector in economic development, home prices have a bearing on financial stability.
According to market watchers, there has been a huge jump in unsold inventories of realty players due to a variety of reasons.
According to a recent report, there were 2.26 lakh unsold houses in the Mumbai Metropolitan Region by end of fiscal 2015-16, which is 31 per cent higher than the year-ago period.
The FSR, authored by RBI executives, said that on the equities front, banking sector stocks have converged with the market-wide index while auto and pharma scrips have emerged as outperformers.