With a sharp rise in loan disbursements and number of beneficiaries in the affordable housing segment, loans of up to Rs 2 lakh has ended up with the highest level of non-performing assets (NPAs) in home loans. Public sector banks reported higher NPAs in the sub-Rs 2 lakh housing loans slab than housing finance companies in 2016-17 and 2015-16, according to an RBI report on ‘Affordable Housing’.
NPAs for housing loans of up to Rs 2 lakh stood at a whopping 11.9% for PSBs during 2016-17. Housing finance companies also saw a sharp surge in housing loan NPAs in this slab. NPAs went up from 6.1% to 8.6% for the sub-Rs 2 lakh slab between 2015-16 and 2016-17. NPAs stood at 10.4% for this slab. The overall NPAs for housing loans stood at 1.5% and 0.6% respectively for PSBs and housing finance companies during 2016-17.
The government’s recent thrust on affordable housing through policy measures that include incentive schemes, accordance of infrastructure tag, interest subsidy scheme under PMAY (Pradhan Mantri Awas Yojana) have resulted in sharp rise in new housing projects in the affordable segment for low income groups. New unit launches in the affordable housing segment registered a 10.1% year-on-year (y-o-y growth in 2016-17. Affordable housing was the only segment in the residential real estate sector that saw a double digit growth. New launches in the mid-range and high-end segments fell by 11.7% y-o-y and 26.7% respectively in 2016-17.
There has been a more than three-fold increase in the number of houses completed under PMAY between April and December 2017. Nearly 2.9 lakh houses have been completed under PMAY as on December 4, 2017, data with the union ministry of housing and urban affairs showed. Investments to the tune of Rs 1.72 lakh have been made under PMAY projects for constructing nearly 32 lakh houses involving a central assistance of Rs 49,537 crore. Of this, central assistance totaling Rs 12,764 crore has already been released.
“From the consumer’s perspective, while availability of low cost credit is driving the demand for affordable housing, policies like Real Estate Regulatory Authority (RERA) Act may infuse fresh buyer interest in the realty sector,” RBI said. While the joint efforts of the government and the RBI to boost affordable housing have generated positive outcome, a host of factors including lack of suitable low cost land within the city limits, lengthy statutory clearance and approval process, shortcomings in development norms, planning and project design is affecting the pace of affordable housing development, it said.