The State Bank of India ((SBI) has passed the Rs 5 billion mark in the home loan business and expects the size of its portfolio to double in the next five years, Chairman Dinesh Khara said on Wednesday. The bank is preparing to launch the home loan co-lending model, which will help improve its presence in the non-organized sector.
Khara said while the book had grown from less than Rs 1 lakh crore in 2011 to current levels, the pace of growth would be much faster from now on. One of the reasons is the marked change in the country’s population, with the younger generation looking to acquire a much younger age compared to 10 years ago.
“We found that 42% of our home loan customers are under 40 years of age. I believe that we will see a much bigger shift in this direction in the future and that the younger generation’s income growth, their aspirations and the concept of the nuclear family will be the reasons why people apply for a home early on ” said Khara, adding, “If I may guess, I would say that the portfolio may be in five years (the portfolio will double) rather than ten years. “
SBI gives construction loans and approves their projects pending acceptance improvement. For home owner-approved loans, processing time is approximately five days. Khara said the bank has a market share of about 35% among all planned commercial banks, and in the future, home loans will be a major focus for the lender in the retail segment. SBI is also committed to implementing Artificial Intelligence (AI), cloud, blockchain, and machine learning that can play a vital role in driving not only the home loan business but other businesses as well.
He tried to allay concerns about the quality of retail credit at a time when a fairly large segment of the population was plagued by job and income losses. The gross non-performing assets (NPA) ratio of the home loan portfolio is 0.67-0.68%. Of 39 lakh borrowers who were eligible under the Reserve Bank of India (RBI) Restructuring plan, only about 10,000 customers have actually taken advantage of the restructuring option which adds up to about 2,500 rupees. “So if we look at a book size of 5 billion rupees, only 2,500 billion rupees have been restructured. These two parameters give a very clear idea of the quality of the book we have, ”said Khara. He pointed out that 72% of SBI’s clients are in the pay grade and are able to meet their commitments quite well.
Of the Rs 5 lakh crore portfolio, home loans are Rs 4.86 lakh crore and the mortgage loan is approximately Rs 11,000 crore. Around 2 Lakh customers have extended credit facilities in the affordable segment.
The bank has seen a trend in home loan balance transfers even though pool purchases have almost stalled. “Metro locations are usually very interest rate sensitive and we managed to get around 23% of Rs 5 lakh crore as a result of the acquisition. We have not made any pool purchases for more than a year. Whatever pools we’ve bought will come down too. So it’s about 4,000 rupees, ”said Khara.