1. Housing loans crisis: Bank lending growth rate to housing sector hits new low

Housing loans crisis: Bank lending growth rate to housing sector hits new low

Home loans have plummeted as the residential market continues to grapple in the wake of reforms such as RERA and GST becoming a reality.

By: | Published: September 13, 2017 2:58 PM
 housing loans, home loans, Bank lending, housing sector, hits new low, RERA, GST For the quarter 21 July 2017, the home loan growth rate was 0.4% compared to 4.7% during the same period last year.

Housing loans had been one of the major drivers to push the retail portfolio of most banks, who are still trying to push home loans among retail customers. The sad part, however, is that there are not too many takers for home loans. As per the latest data released by the Reserve Bank of India (RBI), the growth rate of home loans looks to be tapering off. For the quarter 21 July 2017, the home loan growth rate was 0.4% compared to 4.7% during the same period last year. The fall is more pronounced if compared y-o-y, according to a research report by Knight Frank.

Bank lending to the housing segment grew at 17% by July 2016 compared to the same period in the previous year. This growth slowed down to 10% by July 2017 compared to the same period last year. The slowdown in the home loan growth rate can be attributed to the slowdown in the real estate sector, which was largely a result of the lack of clarity on policy issues like Real Estate (Regulation and Development) Act, 2016 and GST. The low growth rate also means that there is still time before the real estate sector will see better days.

The Pradan Mantri Awas Yojana (PMAY) is gradually making headway. Until now, over 26 lakh houses have been sanctioned with an investment of Rs 1.40 lakh crore. Andhra Pradesh tops the tables with regards the number of houses under PMAY. The state accounts for 21% of the total houses sanctioned. The states of Tamil Nadu and Madhya Pradesh are placed second and third, respectively. In the latest sanctions Andhra Pradesh has got 1.21 lakh more affordable homes followed by Uttar Pradesh (41,173 units), Assam (16,700 units), Gujarat (15,222 units), Jharkhand (14.017 units) and Maharashtra (9,994 units).

On the infrastructure front, Pune is all set to become India’s first Smart City. Pune has rolled out six modules for the said project. These modules deal with areas like traffic management, feedback from citizens and emergency alert systems. At the heart of the ‘Smart City’ initiative in Pune is a hi-tech command and control centre. Surveillance of the city through CCTV, aerial surveillance through a drone, birth and death registration,traffic management, and water and electricity supply can be managed through the command and control centre. Apart from Pune, Nagpur too is expected to have a fully functional command and control centre. Other cities where the command and control centre is in the advanced stage include Kakinada, Naya Raipur and Bhopal, says the report.

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