The Hindu Business Line : ‘Housing finance proves a challenge to banks’

Visakhapatnam, Sept. 24 Banks are facing a challenge with respect to housing finance to meet the demand for loans at a cheaper rate of interest and they have to find ways and means to fulfill customer expectations, according to Mr A.L. Nageswara Rao, General Manager of Andhra Bank.

He was delivering the keynote address at a seminar on housing finance organised by Andhra University and the Hyderabad chapter of the Indian Banks’ Association (IBA).

Mr Rao said that according to RBI guidelines, banks would have to lend three per cent of incremental deposits to housing, “but most banks are lending 15-20 per cent; but even that does not seem to be sufficient.”

On the situation in Andhra Pradesh, Mr Rao said that it was projected that Rs 2,950 crore would be disbursed by various banks in the State for housing during the current fiscal.

The total outstanding amount under housing loans in the State lent by various banks as on March 31 stood at Rs 4,755 crore against Rs 3,835 crore as on March 31, 2006.

Prof J.V. Prabhakara Rao, Principal of Andhra University College of Arts and Commerce, said that housing was the prime driver of the economy in most developed economies.

He welcomed the Union Government’s decision to allow 100 per cent FDI in housing sector.

Prof L. Venugopala Reddy, Vice-Chancellor of Andhra University, said: “Banks should lend more to the sector.”

More Stories on : Housing Finance | Andhra Pradesh

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