RBI
seeks data on home loan borrowers
MARCH 08, 2007, MUMBAI: Concerned over a
possible shakeout in the home loan market,
Reserve Bank of India (RBI) has asked several
leading banks to furnish data on the number
of borrowers who have bought second or third
home, how many them belong to the salaried
class and the default levels in home loans.
On Tuesday, the RBI met leading banks on
a short notice and asked them to provide the
loan details. Officials who attended the meeting
said bankers told RBI that the home loan market
has slowed down following the rise in interest
rates and property prices. RBI has also asked
bank to provide details on loans disbursed
at different interest rates.
“Banks have to provide information
such as Rs x crore loan disbursed as 7% and
Rs y crore at 7.25% and so on. The information
sought relates to floating as well as fixed
rate loans,” said a banker. The fear
is that once the property bubble bursts, borrowers
who have invested in second or third homes
to earn a fat rent could default, as tenants
relocate to properties where the rent is lower.
At that point the properties that have been
pledged with the banks may not be adequate
to cover loan exposure.
Besides, banks are required to provide loan
break-up for the salaried borrowers, self
employed, loans to builders and property developers.
They were also asked to provide information
on the various frauds that have surfaced in
the home loan segment and measures that banks
are taking to protect themselves against such
delinquencies.
“RBI also made inquires on the role
of home loans as a component of asset price
bubble,” said a banker. In other words,
RBI is keen to find out to what extend home
loans have contributed to the perceived asset
price bubble, said a banker. Over the last
two years at several occasions RBI has cautioned
banks on financing home loan customers. In
2004, when more and more banks were offering
home loans at cheaper rates, the central bank
raised the risk weightage on home loans from
50 basis points to 75 bps and subsequently
in July 2006 to 100 bps.
Further, in order to discourage banks from
funding property developers following a steep
rise in the property price, RBI raised the
risk weightage on loans to commercial real
estate in various stages from 100 bps in July
2005 to 200 bps in the January 2007. At present,
home loans account for nearly 15-20% of loan
books public sector banks while for ICICI
Bank, which has the largest share of home
loan in the banking sector, it is about 30%.
Loan disbursement in the banking sector rose
44% in March ‘06 over the previous fiscal
year, from Rs 1,28,728 crore to Rs 1,86,429
crore.
Source:indiatimes
