Home, vehicle and rural loans top pre-Covid levels

Mumbai: Home, vehicle and rural loans are helping banks and non-bank lenders spare their blushes even as they remain risk-averse to unsecured and wholesale credit.Most banks and non-banking finance companies saw their home, vehicle and farm loans surpassing pre-Covid levels in the quarter ended September while the overall credit book shrunk for some lenders.The Reserve Bank of India’s data recorded till the end of August showed that mortgage loans grew 11 per cent over last year while vehicle loans rose 8.5 per cent and agri loans grew nearly 6 per cent. Overall credit to the industrial sector grew 0.5 per cent over last year even at the time when overall credit to the system recorded multi-decade low levels of 6 per cent.“Parts of the retail book have come back to normal,” said Dipak Gupta, joint managing director at Kotak Mahindra Bank. “Non-urban segments on the rural side and mortgages are doing well, but we are being cautious on retail unsecured lending and MSME (micro, small and medium enterprises) segment. At this point, the risk-return opportunity does not justify for us to press the accelerator on lending,” he said.Kotak Mahindra Bank continued with its conservative stance and saw its advances degrow by 4 per cent year on year to Rs 2.04 lakh crore at the end of September. Its mortgage book grew by nearly 5 per cent during the same period.Non-bank lender L&T Financial Services recorded its best monthly disbursements in the rural business, which grew 59 per cent over last year and also witnessed a strong pick up in infrastructure disbursements.“We are focusing on strengthening the balance sheet and creating good quality assets; while the overall book may have grown by 1 per cent, the good book has grown significantly, which bodes well for profitability in the coming quarters,” company managing director Dinanath Dubhashi said. “We have stopped lending to the real estate sector and that stance is likely to continue for some time,” he said.M&M Finance, too, said it has seen a healthy pick up in its tractors, passenger cars and light commercial vehicle segments as the rural market remained sufficiently insulated from Covid-19.Mortgage loans grew across banks and NBFCs with borrowers looking to buy homes as property prices softened across the country. Shriram Housing Finance surpassed its pre-Covid performance and recorded a 20 per cent AUM growth in its home loan portfolio over last year.“This quarter, in terms of home loan disbursals, has been the largest ever,” said Ravi Subramanian, MD, Shriram Housing Finance. “In the pandemic, people have realised the value of a home and a bigger home. In fact, softer real estate prices, (and) incentives like the waiver of stamp duty are aiding the growth of this segment, and I see normalcy returning to the system.”Mortgage loan sales have also been aided by historic low levels of interest rates and concessions offered by lenders to lure buyers. Large banks and non-banks are lending at never seen before rates of 6.7 per cent to 7.2 per cent to buyers with good credit score. SBI, HDFC, ICICI Bank, Axis Bank and LIC Housing Finance have seen market share shift to them, industry insiders said.“This is a unique phase where property prices are low and interest rates are low, so people with stable jobs have taken the plunge to buy a home,” said Mahesh Misra, CEO of India Mortgage Guarantee Company (IMGC) that has guaranteed loans worth Rs 8,500 crore.

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