The total loan disbursement towards the housing sector was estimated at Rs 70,000 crore in April to December, 2005 period, a growth of 25% over the corresponding period in the previous year. The banks and housing finance companies (HFCs) have projected a total disbursement of Rs 1 lakh crore for the current fiscal.
Industry analysts said that the improvement in recovery is due to the implementation of the Sarfaesi Act in the housing loan sector, in 2003. It may be noted that LIC Housing Finance has already sent 7,000 notices, of which 360 properties have been already aqcuired.
PNB Housing also said that recovery has grown, thanks to the Sarfaesi Act. We are satisfied with the recovery levels. We have also managed to resell 30% of the acquired properties, SK Mitter, director and chief executive, LIC Housing Finance Ltd said.
Before the Sarfaesi Act was put in place, recoveries were significantly lower than the current levels, VK Khanna, managing director, PNB Housing said, adding that the Act has provided the much needed legal teeth to keep the sector on track. Mr Khanna pointed out that with the Act in place, recovery levels would further improve in the next few years.
It may be noted that most HFCs and banks have increased their interest rates in the last few weeks.
Meanwhile, analysts said the growth in the housing sector would come from the smaller towns. Mr Mitter added the annual growth rate of 25% in the sector would be maintained in the coming years. Vineet Nigam, senior analyst Icra Ltd said that with the act in place, there could be a decline of another 0.5% in the next fiscal.