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Banks' exposure to home loans up 60%

BS Banking Bureau in Mumbai

Banks have gone whole hog into the home loan sector. Banks' credit to the housing sector increased by 60.12 per cent to Rs 26,983 crore (Rs 269.83 billion) as on June 28, 2002 against Rs 16,851 crore (Rs 168.51 billion) in the previous year.

In contrast, bank credit to consumer durables has seen only a rise of 4.25 per cent in the same period to Rs 6,864 crore (Rs 68.64 billion) against Rs 6,587 crore (Rs 65.87 billion) the previous year.

The gross bank credit to the priority sector has increased by 11.36 per cent to Rs 1,70,949 crore (Rs 1,709.49 billion) from Rs 1,53,499 crore (Rs 1,534.99 billion), while the credit to industry increased by 12.18 per cent to Rs 1,78,199 crore (Rs 1,781.99 billion) from Rs 1,58,841 crore (Rs 1,588.41 billion).

The RBI has also added that industrial credit as a percentage of net bank credit has declined to 42.9 per cent in 2001-02 from 46.8 per cent in 2000-01.

The incremental credit to the industrial sector decelerated to 4.9 per cent or Rs 1,06,845 crore (Rs 1,068.45 billion) in 2001-02 as against 9.3 per cent or Rs 1,87,060 crore (Rs 1,870.60 billion) the previous year. The other major sector which has seen a sharp rise in credit by banks are non-banking financial companies where credit increased by 40 per cent to Rs 10,628 crore (Rs 106.28 billion) and real estate loans which showed an increase by 32.81 per cent to Rs 2,627 crore (Rs 26.27 billion).

Advances by scheduled commercial banks to the capital market dropped sharply by 33.96 per cent to Rs 3045.19 crore (Rs 30.451 billion) in 2001-02 against Rs 4,611.46 crore (Rs 46.114 billion) the previous year.

The state bank group has stepped up its capital market exposure by 43.08 per cent albeit on a paltry base of Rs 116.52 crore (Rs 1.165 billion).

The overall exposure of the industry to the sensitive sectors including capital markets, real estate and commodities increased to 3.6 per cent of total loans and advances or Rs 23,224 crore (Rs 232.24 billion) as on end of March 2002 which was a marginal rise of 3.1 per cent the year.

This was primarily led by the rise in lending to the real estate and also to commodities sector. The lending to real estate sector rose by 16.82 per cent to Rs 9,772.8 crore (Rs 97.728 billion), while that to the commodities sector rose by 8.95 per cent to Rs 10,405.56 crore (Rs 104.555 billion).

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