The bank, which witnessed a spike in NPAs in its home loan portfolio post the merger of the associate banks, expects the NPA levels to dip with improvements in underwriting and recoveries.
By Mitali Salian
State Bank of India is targeting over 15% growth in its real estate portfolio and 12-14% overall growth in the retail book in the coming financial year, Parveen Kumar Gupta, managing director-retail and digital banking, tells Mitali Salian. The bank, which witnessed a spike in NPAs in its home loan portfolio post the merger of the associate banks, expects the NPA levels to dip with improvements in underwriting and recoveries. Excerpts:
What features of SBI’s home loans make them a huge draw?
It is features like lowest interest rate, long tenor of up to 30 years, and opportunities to avail other facilities like top-up loan, car loan, and education loan that make the SBI Home Loan offering the best product in the market. Most importantly, there is complete transparency in our charges and fees. There is also the customer trust the bank has built over the last 210 years. We have entered into a large number of tie-ups with builders wherein projects have been pre-approved, enabling quick sanction of loans.
Do you plan to introduce any new features?
A new combo product called Dual Advantage Maxgain Home Loan, with a term loan and overdraft facility, would be offered to home loan customers, allowing for better management of their surplus funds.
Would the budget sops for real estate companies have any meaningful impact on your home loan portfolio in the medium term?
The tax sops offered to real estate companies as per Section 80-1BA have been extended up to March 2020. This, coupled with infrastructure status for affordable housing and extension of the time limit for project completion from three years to five years, should induce more builders to launch affordable housing projects /SPVs.
The budget also provided a two-year timeframe for developers to pay tax on notional rental income on completed but unsold units. This should offer some comfort to the builders, ensuring sale of unsold units at reasonable rates rather than in distress mode.
With the CLSS-MIG (PMAY), implemented initially for a period of one year, i.e. from January 1, 2017 to December 31, 2017, being extended up to March 31, 2020, our home loan portfolio is likely to get a boost from the middle income segment.
Growth momentum for housing finance companies took a beating from the liquidity crisis caused by IL&FS. A recent Cobrapost article hit DHFL further. Do you think these events have created an opportunity for well-capitalised banks to regain lost ground?
With NBFCs going easy on fresh sanctions of loans, the bank is geared up to meet any additional demand for housing loans.
Could you talk about the asset quality of your home loan portfolio? Any particular areas in which you apprehend NPAs?
Our NPA level is one of the lowest for ASCBs. While there was a spike in NPAs post the merger of associate banks, we expect the NPA levels to dip given a consistent improvement in underwriting and recoveries.
What are the SBI’s targets for the retail lending book and the housing portfolio in the upcoming fiscal?
We are targeting over 15% growth in the real estate portfolio and 12-14% overall growth in the retail book.
While we are yet unaware of the detailed guidelines for the RBI’s proposal of banks linking floating rate loans to external benchmarks from April, what impact do you see them having on your retail home loan portfolio?
We expect more volatility if this happens, as a change in EBR might cause frequent variation in the effective interest rate and EMIs.
Any plans to raise capital to finance affordable housing or infrastructure projects in the next fiscal?
We are adequately capitalised to meet any demand from the affordable housing, or infrastructure sector.