RADHIKA MERWIN |Published on January 8, 2018 | Business Line
Despite a weak start, industry expects better response to PMAY(U) in FY19
January 8, 2018: In Budget 2018-19, the Centre may have to redo its math on the allocations to the interest subvention scheme on housing loans.
While the credit-linked subsidy scheme (CLSS) under the Pradhan Mantri Awas Yojana (Urban) [or PMAY(U)] for the middle-income group (MIG) is off to a weak start, the number of beneficiaries for the economically weaker section (EWS) and low-income group (LIG) has shot up in the past year.
MIG beneficiaries numbered a mere 9,944 and received a subsidy of ₹204.6 crore till date, Union Minister Hardeep Singh Puri told the Lok Sabha last month. However, Budget 2017-18 had allocated a larger sum of ₹1,000 crore as interest subsidy for MIG beneficiaries.
Interestingly, the number of beneficiaries under CLSS for EWS and LIG — the beneficiaries originally envisioned under PMAY(U) — rose sharply from 17,634 in 2016 to over 53,000 accounts in 2017. The ₹400 crore earmarked in last year’s Budget for this segment appears to grossly fall short of the actual disbursement.
With industry players expecting a better response to the scheme in the middle-income category, too, the Centre could end up allocating a far higher amount for CLSS in the upcoming Budget.
In June 2015, the Centre had launched the CLSS under PMAY(U) for EWSs and LIGs. However, to placate the common man reeling under the impact of demonetisation, Prime Minister Narendra Modi had extended the scheme to middle-income home buyers.
Budget 2017-18 had reduced the allocation to the EWSs and LIGs to ₹400 crore from ₹475 crore in 2016-17, and instead, apportioned ₹1,000 crore to MIGs under the CLSS.
Given that a total of 80,680 beneficiaries have availed interest subsidy under the CLSS schemes for all categories until now, it would seem that a little over 53,000 EWS and LIG beneficiaries claimed interest subsidy in 2017.
This would imply a subsidy of around ₹1,300 crore disbursed against the budgeted ₹400 crore for the EWS and LIG category (assuming an average of ₹2.5 lakh per beneficiary).
The Centre had recently increased the eligible carpet area from 90 sq m to 120 sq m for MIG I and from 110 sq m to 150 sq m for MIG II.
“Based on the feedback given by industry players, the Centre has fine-tuned the scheme to cover more beneficiaries under the MIG scheme,” says Sriram Kalyanaraman, Managing Director & CEO, National Housing Bank (NHB).
He adds that there has been a significant step-up in the pace of construction of houses under the scheme, which should lead to more takers in 2018.
The NHB, one of the Central Nodal Agencies to channel the subsidy to lending institutions, has covered 42,481 accounts and disbursed ₹906 crore subsidy between April 2017 and 5 Jan 2018 under EWS and LIG.
Sudhin Choksey, Managing Director, Gruh Finance says: “The CLSS under PMAY (Urban) has been a vast improvement over the earlier schemes. Higher awareness and increase in supply of houses should see more beneficiaries being covered under the scheme”.
Gruh Finance continues to focus on the EWS and LIG segment, which constitutes 85 per cent of their loans. In 2017-18 (so far), it disbursed 25,768 loans, of which 40 per cent have availed of the interest subsidy under CLSS.
Source : https://goo.gl/PfV1mE
PTI | Updated: Jan 9, 2018, 16:01 IST | Times of India
MUMBAI: Even as a lot of thrust is being given to the affordable housing segment, a report has flagged concerns about the growing delinquencies in this segment, which are expected to continue in 2018.
Competitive pressures and larger exposure to the self-employed are the prime reasons for the build-up of stress in the segment, a joint report by Moody’s and its domestic affiliate Icra said today.
“While asset quality is expected to remain stable in the traditional housing segment, delinquencies could further build up in the affordable segment in the calendar year of 2018,” Icra’s structured finances head Vibhor Mittal said.
In a note on asset backed securities (ABS) co-written with its parent Moody’s, the report said gross-nonperforming assets in the affordable housing segment have inched up to 1.8 per cent as of September 2017.
The average cum 90+ days past due level for affordable housing was nearly seven times the level observed for traditional housing loan pools, it said.
Going into the reasons for the higher stress in the low ticket size loans, Mittal said, “this would be driven by factors like intensifying competition– resulting in some easing in lending standards — and a higher share of lending to the self-employed segment.”
It can be noted that the Modi government is targeting to ensure that there is a house for all by 2022 and has provided a lot of incentives for the affordable housing segment, including making it as a priority sector lending for banks and huge interest subvention and direct cash subsidy.
However, housing loans continue to be seen as the best performing retail loan asset class in the country, demonstrating low and stable delinquencies over the years, in 2018, it said.
This is possible because of the underlying collateral, which is self-occupied residential property, absence of steep correction in property prices and moderate loan to value ratios, the report said.
Moody’s said the impact of demonetisation and the implementation of the goods and services tax (GST) will lead to higher delinquencies in ABS for loans against property (LAP) to small and medium enterprises.
“Introduction of a GST in July 2017 and demonetization have placed stress on the SME sector,” Icra’s assistant vice- president Dipanshu Rustagi said.
The report also said auto ABS-backed by commercial vehicles loans will remain stable on the back of healthy domestic economic growth.
Icra said the microlending segment is on a “road to resurgence” after the note-ban setback with an increase in repayment rates to 94 per cent in September from the low of 87 per cent seen during December 2016 during the peak of the note-ban move.
PTI | Published Date: Jan 02, 2018 07:52 am | FirstPost.com
Mumbai: In a major boost to homebuyers, the country’s largest lender State Bank of India has extended the processing fee waiver till March-end and also reduced the base rate by a sharp 30 basis points to 8.65 percent.
The reduction in base rate, effective from Monday, is going to bring relief for nearly 80 lakh customers of the bank whose loans are still linked to the base rate and not the marginal cost of funds-based lending rates (MCLR).
Flushed with excess liquidity, SBI had announced processing fee waiver for auto and home loans late August. In fact, since last fiscal, and especially after the November 2016 note-ban, all the banks have been saddled with excess liquidity amidst continuing degrowth in industrial credit.
For the first time in over two years, credit uptake by corporates entered the positive terrain but with a paltry 1 percent growth in November this year. “We’ve decided to extend the ongoing waiver on home loan processing fees till March 31, 2018 for new customers and others looking to switch their existing loans to us,” SBI said in a statement on Monday.
Managing director for retail and digital banking P K Gupta said that with stability returning to the realty space after the implementation of the Real Estate Act (Rera), he sees lots of demand for home loans going ahead. “With most states having the realty regulator Rera now, stability has returned to the market in terms of project approvals. The teething troubles of the initial Rera months are behind the market. So, we foresee lots of demand for home loans. So, we think this is the right time to continue with that waiver to enable people for buy homes,” Gupta said in a concall.
The bank revised down the base rate to 8.65 percent for existing customers from 8.95 percent, while the BPLR (benchmark prime lending rate) is down from 13.70 percent to 13.40 percent.
The bank, however, did not change the marginal cost of funds-based lending rate (MCLR). The one-year MCLR of the bank stands at 7.95 percent.
“We had done the rate review in the last week of December, and based on whatever deposits rates we had, our base rate was brought down by 30 basis points to 8.65 percent now,” Gupta said.
The move is going to give nearly 80 lakh customers of SBI who were on the old lending rate regimes and have not moved to MCLR. Banks review MCLR on a monthly basis, while the base rate revision happens once a quarter.
“The MCLR was reduced earlier also as the gap between MCLR and base rate had become quite wide. This reduction will help in reducing that gap,” he said.
Due to weak transmission of policy rate by banks under the base rate system, the Reserve Bank had introduced the MCLR from 1 April, 2016.
With the banks not fully passing on the rate cuts that the central bank has done in the past two years, the regulator is not happy even with the base rate regime and has mooted an external benchmark to better reflect market realities and speedier transmission.
Gupta said the current revision of base rate will ensure transmission of the policy rate cuts in the recent past.
From the past few quarters, the real estate markets in India have been going through a phase of massive change.
Kanika Gupta Shori | Retrived on 1st Dec 2017 | Moneycontrol.com
How do you time your entry in any investment channel — whether it is equities or real estate? Is it the juncture when the markets are booming and everyone is joining the fray? Does that make for a sound investment decision? Probably, not!
Most retail investors and homebuyers make this mistake. They buy when the prices are peaking. Naturally the returns are not as expected. Am I right?
Well, I am citing the basic principle of investing here. If you are on board, I would further explain why 2018 should be the year you should enter the real estate market.
From the past few quarters, the real estate market in India has been going through a phase of massive change. The regulatory reforms implemented through frameworks defined under the Real Estate Regulatory Act (RERA), and Goods & Services Tax (GST) to an extent, have led the sector in a certain direction.
It is mandatory for all the real estate projects to be in compliance with the provisions of RERA, which attempts to make sure that projects are delivered in time and the money paid by buyers for certain projects is not squandered for other purposes.
In short, RERA protects consumers’ interests. It will be impossible for fly-by-night operators to be in the market and only the most-committed players will be able to navigate the roadmap. This will benefit both buyers and sellers, in the long term.
It is a buyers’ market
The combination of excess supply, high prices and low consumption has translated into huge inventories across the country. The consumption side has also been impacted by demonetization. Clearly, it is a buyers’ market for now – and for the next few quarters. But not for long!
With RERA in place, developers are now focusing on completing their existing projects. The new home launches, across top eight cities in India, have gone down by more than 75 percent in the third quarter of the current fiscal, as per industry research reports. The overall number of project launches has gone down by more than 40 percent in the first nine months of the current calendar year. These trends imply that the supply side will gradually find some equilibrium with demand, and prices will subsequently start picking up pace.
However, in the present environment, there is a situation of excess supply and property buyers are in a better position to negotiate, and grab a great deal.
As per industry reports, the National Capital Region (NCR) and Mumbai Metropolitan Region (MMR) have around 2 lakh and 1.8 lakh unsold units respectively.
Home loan interest rates are at all-time low
The excess liquidity in the banking system have led the RBI rejig the key lending rates. Resultantly, the home loan interest rates that were recorded at around 9.5 percent a year in 2016 have now been floating in the range between 8.3-8.4 percent.
That makes for considerable savings in the EMI costs; enabling people to avail of low-cost home finance, and become a home owner. It is expected that the home loan rates will remain low for the next several quarters and may even come down further.
Considering the average annual rental yields at 5-6 percent, there is not much difference between the costs of rent and owning a home.
Steady revival of interest from global investor fraternity
The implementation of overarching regulatory mechanisms has instilled a much higher level of confidence in the global investor fraternity. The real estate sector is projected to receive Private Equity (PE) investments to the tune of US$4 billion during this fiscal year, as per industry reports.
Not just the PE funds from the US, Canada and Singapore are interested in infusing capital in the sector, but countries such as Japan, China, Qatar, Hong Kong and the Netherlands are also poised to invest in the sector.
At the same time, global sovereign wealth funds—that are otherwise known for their risk-averse, conservative approach—have been increasing their exposure to the market and it proves that the sector is headed in the right direction.
As for property buyers, it is a sign of revival on the cards.
In overall, the current environment presents an opportunity to buy property and make the best out of the coming year.
(The author is COO of Square Yards)
Growth in mortgages in the banking sector slipped to 11.4% year-on-year (y-o-y) in October from 12.8% in September, data released by the Reserve Bank of India (RBI) on Thursday showed.
By: FE Bureau | Mumbai | Published: December 1, 2017 4:51 AM | Financial Express
Growth in mortgages in the banking sector slipped to 11.4% year-on-year (y-o-y) in October from 12.8% in September, data released by the Reserve Bank of India (RBI) on Thursday showed. Home-loan outstandings at banks had grown 16.6% y-o-y in October 2016. The total outstanding on mortgages in the banking system stood at Rs 9.03 lakh crore as on October 27 this year. Retail loans as a category grew 16% y-o-y in October, a shade slower than 17% in October 2016. Outstanding retail loans as on October 27 stood at Rs 17.45 lakh crore. Loans to individuals had been clocking growth figures in the mid-to-late teens since May 2015, before signs of a slowdown began to surface in November 2016.
In September, outstandings on credit cards grew the most, at 37.7%, among all categories of loans to individuals. Vehicle loans grew 7.4%, significantly slower than 23.5% in September 2016, while consumer-durable loans dropped 9.4%, as compared to a year-ago growth figure of 20.3%. Credit to industry contracted on a y-o-y basis for the thirteenth straight month in October, falling 0.2% y-o-y to Rs 26 lakh crore. In October 2016, the corresponding figure stood at Rs 26.05 lakh crore, 1.7% lower than the October 2015 level.
Industrial credit has been falling almost consistently since August 2016, with September 2016 being the only month of positive growth ever since. Credit deployment in industry fell 13.5% y-o-y in the medium industry segment. However, loans to large industry and micro-and-small industry recorded positive growth, rising 0.2% and 1.2%, respectively, over the year-ago period. Bank credit to industry has been muted for the past couple of years as lenders turned cautious amid worsening asset quality and well-rated corporates chose to raise money from the bond market.
Loan growth has been suffering partly due to capital-starved public sector banks. Analysts expect the recapitalisation of state-owned banks to fuel credit growth in the months ahead. In a recent note, Kotak Institutional Equities wrote that lenders like Bank of Baroda, Canara Bank and Union Bank of India should see loan growth improving. “Loan growth for PSU banks is also partly supported by loan buy-outs from NBFCs and private banks. Retail cycle continues to hold up well, prompting many banks to pursue this segment more aggressively,” Kotak said. Trends in the corporate loan growth appear anaemic, according to the brokerage, with few signs of a turn in the capex cycle.
By Staff Reporter | Published On: Mon, Nov 13th, 2017 | Accommodation Times Bureau
NEW DELHI: Tata Housing said they are partnered with Indiabulls Housing Finance on Friday to offer home at 3.99 percent interest rate for those home buyers who buy flat in ongoing 11 projects. In the current scenario, the home loan rates are around 8.5 percent.
On Friday ‘Monetize India’ campaign was launched by Tata Housing in partnership with Indiabulls Home Loans.
The company said in a statement, it gives more opportunity to home buyers to own Tata Housing property “at a special, one-time home loan rate of 3.99 percent. This special home loan rate would be valid for the first five years.”
“It has been an eventful year for the sector in India which is standing on the threshold of change…We hope that this will stimulate fence-sitters to act on their need or wish to invest in real estate, as it continues to be one of the best forms of security and wealth generating assets,” According to Tata Housing Head – Marketing and Sales Tarun Mehrotra.
The scheme, valid from today until December 12, 2017, would be offered across 11 projects by Tata Housing in seven cities.
The police are interrogating bank employees to find out how the loan was approved despite forged documents.
Farhan Shaikh | MUMBAI | Updated: Nov 10, 2017 18:29 IST | Hindustan Times
The Santacruz police are investigating a cheating case where seven people allegedly conned Bombay Mercantile Bank to the tune of Rs. 34.65 lakh. The police registered the case after bank employee, Abuzar Rizvi, 53, lodged a complaint against seven people for fraud.
The accused allegedly forged documents to get a loan worth Rs. 34.65 lakh cleared for two flats in Malad. Senior inspector at Santacruz police station, Shantanu Pawar said, “The accused applied for a loan for two flats in Vijay Properties’ Pride Building a couple of months ago.” To find out how the loan was approved despite forged documents, the police are interrogating bank employees who were involved in the process.
The illegal nature of the documents was noticed at the Santacruz (West) branch of the bank, following which the bank officials alerted the Santacruz police station. The case was registered on Thursday under relevant sections of the Indian Penal Code (IPC) for criminal conspiracy, cheating, and forgery. The police have booked the loan applicant along with six others, including the middlemen involved in the forgery.
Bank officials at the Santacruz branch were not available for comment.