Share of housing loans in total advances rises to 14.2% in 11 years: RBI report
- IBEF
- July 3, 2023
According to the Reserve Bank's latest Financial Stability Report (FSR), the share of residential home loans in total advances has risen over the last eleven years to 14.2% in March 2023 from 8.6% in March 2012. It also stated that the housing sector is experiencing robust expansion, with sales increasing by 21.6% in the fourth quarter (January-March) of 2022-23.
In addition to increased sales, new product introductions maintained steady growth, indicating that end-user demand is strong. According to the report, the share of residential dwelling loans in total loans has climbed over the last eleven years to 14.2% in March 2023, up from 8.6% in March 2012. During this time, the proportion of commercial real estate (CRE) loans in total loans has ranged from 2.0 to 2.9%.
In March 2023, the banking system's total real estate exposure was 16.5% of total loans. Loan defaults remain less than 2% due to the secured nature of these loans and loan-to-value (LTV) ratio rules. Furthermore, the Reserve Bank of India's (RBI) home loan laws and standards play a critical part in sustaining this low NPA rate.
According to RBI data, the outstanding housing (including priority sector housing) loan in March 2023 was US$ 23.66 billion (Rs. 19,36,428 crore), up 15% year on year. The FSR also stated that the all-India house price index (HPI) increased the most in the last seventeen quarters (4.6% year on year) in the fourth quarter of 2022-23.
It also stated that during the fourth quarter of 2022-23, house sales increased by 21.6%, while new launches increased by a similar amount, indicating strong demand from both end-users and investors.
According to the RBI's 'Basic Statistical Return on Credit by Scheduled Commercial Banks in India - March 2023,' the share of loans with interest rates greater than 9% increased to 56.1% in March 2023, coinciding with the monetary tightening measures that began in May 2022.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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