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Our Bureau

`Could spill into commercial real estate, SME sectors'

MR O.P. BHATT

Mumbai April 27 State Bank of India is staring at a rise in non-performing assets (NPAs-bad loans) in the housing loan segment.

"The fact is NPAs are rising in the housing loan sector. It is beginning to bite as the economy is predicted to slowdown, inflation is on the rise and there are other infrastructure problems," said Mr O.P. Bhatt, Chairman, SBI, at the seminar on `International Conference on Emerging Challenges to the Indian Financial system'.

"There has been a rise of around 50 basis points to around 3-4 per cent in NPAs in the housing loan segment," said Mr Bhatt.

He said rising NPAs could spill into the commercial real estate and small and medium enterprises sectors. It could lead to an asset bubble. "At the moment there is no cause for concern, but there is definitely a cause to think, plan and act,'' he said

However, banks such as Bank of India do not see a jump in NPAs in home loans. "We don't see any alarming trend in the NPAs in the housing sector. Currently, our NPAs in the home loan segment is below 2 per cent," said a senior official at Bank of India.

Credit growth

Mr Bhatt placed credit growth in the current fiscal at 25 per cent against 28 per cent last year. Deposit growth could be higher at 20-22 per cent from 16-17 per cent earlier.

Talking about challenges in the Indian financial system, Mr Bhatt said other than rising NPAs, adoption of new technologies by banks is another challenge.

Finding the right kind of talent for working in the banking system is a third hurdle. "We don't have enough people," he confessed.

More Stories on : Housing Finance | Non-Performing Assets | State Bank of India

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