The report, which was presented in Parliament on Tuesday, pointed out that HFCs like Hudco, Cent Bank Home Finance Ltd (CBHFL) and BOB Housing Finance Ltd (BOBHFL) have been particularly hit by the rising NPA levels. Inadequate functioning of various internal controls relating to appraisal, sanction, disbursement, monitoring and recovery have led to a surge in NPAs, it said.
Housing loan disbursements have risen from Rs 23,858 crore in 2001-02 to Rs 86,034 crore in 2005-06, recording a jump of 261%. However, the public sector housing lenders' market share during the period fell from 10.19% in 2001-02 to 2.63% in 2005-06. These firms lost ground as they lacked adequate network and there was limitation of access to low-cost deposits as well, it said.
Even the share of private sector HFCs dipped to 29.23% in 2005-06 against 51.06% in 2110-02.
Interestingly, scheduled commercial banks increased their market share from 35.90% to 68.14% during the same period, slowly driving the small HFCs out of the market, the report noted.
The report underlined the need for HFCs to redefine and implement operational strategies in a bid to arrest the declining trend in their business.
HFCs should review and strengthen their internal control mechanisms to ensure accountability at all stages of operations and to improve credit delivery mechanism, the report pointed out. It added that the HFCs should draw up time-bound plans to take immediate legal steps for recovery of overdues while encouraging disposal of their NPAs by evolving an objective system of determining the sale price of mortgaged assets.
The total housing shortage in the country in 1997 was estimated to be 13.66 million units.