Express News Service
NEW DELHI: State Bank of India (SBI), the country’s largest lender, is looking to scale up its home loan business in a big way, cashing in on the demand from the younger population and leveraging its low-cost borrowing. The public sector bank, which took a decade to grow its mortgage portfolio to Rs. 5 lakh crore from Rs. 89,000 crore in 2011, is now aiming to cross the Rs.10-lakh-crore-mark over the next five years.
“The home loan book is now the single-largest portfolio in the asset base of SBI. When it comes to demand, every third borrower happens to be from SBI.
We have seen that 42 per cent of our customers are under the age of 40 or below and we expect to see a much greater shift in this direction,” said Dinesh Kumar Khara, chairman, SBI.
Currently, SBI dominates the home loan segment with 34 per cent market share and its portfolio stood at Rs. 4.84 lakh crore as on December 31, 2020. It is also looking to increase its share of retail in the overall loan book to 45 per cent in one year from 39 per cent now.
SBI offers home loans at an external benchmark rate of 6.65 per cent, the cheapest in the industry. Loans in the range of Rs. 30-32 lakh are popular and the bank has seen more demand coming from places other than the top eight cities, Khara said, adding that almost 23 per cent of the Rs 5 lakh crore home loan portfolio comprised takeover loans.
He also added that very few of its home loan customers, hit by the pandemic, opted for a one-time restructuring scheme.
“About 72 per cent of our borrowers are salaried and we do not see any stress in the home loan portfolio. Of the 39 lakh borrowers who were eligible for loan restructuring under the RBI-approved scheme that was allowed after the six-month moratorium facility got over in August, only 10,000 have availed the option, which is aggregating to about Rs. 2,500 crore,” Khara said. The gross non-performing assets (NPA) in the home loan division are 0.68 per cent of the total loan book.
The greater push for the home loan business comes at a time when the industry is betting on mortgage lending as the next big boom. For a bank with SBI’s size and reach, ramping up real estate financing will be relatively easy.
With its historically low interest rates, SBI has already been able to acquire customers from rival banks and non-banking lenders including housing finance companies. Khara added that a new retail loan management system is also being put in place which would reduce the time taken for turnaround of loans. In the home loan segment, the turnaround time is currently about 10-12 days.
Meanwhile, the bank on Wednesday also said that it is gearing up to start a co-lending model for home loans to strengthen footprints in the unorganised sector. To make loans accessible, the bank has waived the processing fee on home loans till March 31, 2021.
Last year in November, the Reserve Bank of India had come out with a co-lending model aims to improve the flow of credit to the unserved and underserved sectors of the economy and make available funds to the ultimate beneficiary at an affordable cost, considering the lower cost of funds from banks and greater reach of the NBFCs. Under this, SBI can co-lend with all registered NBFCs. The co-lending banks will take their share of the individual loans on a back-to-back basis in their books. However, the RBI said that NBFCs shall be required to retain a minimum of 20 percent share of the individual loans on their books. This means, if the loan size is Rs 10 crore between the bank and NBFC, the NBFC needs to retain at least Rs 2 crore on its book.
Source: newindianexpress.com