Retail housing loans will grow at 19-20% per year

Written by Sunny Verma | Timsy Jaipuria | Updated: Aug 24 2012, 09:44am hrs
Despite the economic slowdown, housing prices are unlikely to fall in the near future, said National Housing Bank CMD RV Verma. Retail loans for the housing segment are growing at about 20% and the residential real estate market is largely stable, Verma told in an interview with FEs Sunny Verma & Timsy Jaipuria. Excerpts:

What is at the top of the agenda for the National Housing Bank (NHB)

We are working on securitisation deals within the Reserve Bank of India (RBI) framework. We have done the pool selection and the total deals will be about R1,000 crore. SBI Caps will now be scouting around for the investors. The rating on these securitised products should be AAA with credit enhancement. There is a minimum retention of 10%, besides the lock-in period. The RBI guidelines over here are very clear. We are in the process of stitching up these deals.

Will these plans support securitisation market in India

Yes, we are also setting up a mortgage guarantee fund for which a mortgage guarantee company has already been funded. We will be sending an application to the RBI for registration. All these developments are to support the securitisation market. The company should start writing its policies before March 2013.

What is NHBs plan for Residex (an index tracking property prices), what are the expansion plans

We want to increase the coverage of cities from 20 to 25. Identification of cities have begun. Cities like Bhubaneshwar are likely to be included.

What is the loan disbursal scenario and whats the inventory like

Loan disbursals are good in the sector but there is a huge inventory. There is tremendous pressure on the builders but they are not going to reduce prices. We are seeing a largely stable market going forward. Retail loans in the segment will continue to grow at 19-20% per year. There is sustained demand for housing units from cities like Pune and Bangalore. Demand has continued to be quite robust in these cities.

How much loans do you estimate to disburse this year

Our projected disbursal this year is about R17,000 crore.

How will you be able to arrange for funds this year

We have got R4,000 crore from the government as part of the rural housing fund. We have also started a special refinance scheme for low-income people for loans up to R2 lakh.

Are you contemplating any new financing models

We are starting refinance for rental housing projects, as there is good demand for such projects, especially in industrial belts. States like Punjab, Tamil Nadu and Karnataka have included rental housing projects in their state housing plans. This would enable bank funding for such projects.

Why are the banks non-performing assets increasing

We need to understand, NPAs are now system-generated too. Therefore there is some hike. But the banking sector has its strengths. Housing finance companies continue to be on a strong footing. There we do not see bad loans expanding.