Demand rises, offers galore

The slump is over… at least if home loan uptake from banks is anything to go by. In a city like Bangalore, where the home market demand is driven by the IT/ITeS sector employees, the recovery seen in the sector has brought the buyer back to the market.

The demand for homes in 2008-09 had seen a downward spiral with uncertainty in the job market.

Now that the IT sector is back on the recovery path, and IT companies announcing salary hikes, the home market is buzzing again.

Bankers across the country point out that the demand for home loans started picking up last year.

This time around, the demand was from the genuine home-buyer. The speculator was out of the home market.

Festive offers

And to cash in on the recovery in demand for both home-buys and home loans, banks launched special festive offers for retail credit, especially targeting the home buyers and car buyers in the country.

That seems to have paid off well for them! Some of the banks that Business Line spoke to pointed out that their retail credit off-take was up this fiscal by over 20 per cent.

15-fold increase in retail lending

According to the Reserve Bank of India data, between November 2009 and November 2010, banks' retail lending has seen a nearly 15-fold increase.

This was achieved on the back of a spur seen during the festival months of September, October and November, with the data showing that about 30 per cent of the loans were disbursed between September and November 2010.

Buying spree

Banks are clearly in no mood to let this buying spree end… some of the big banks have been organising events targeting the home buyers.

The residential segment, which is spurring the demand for housing, is the Rs 25 lakh-30 lakh segment, say bankers.

Auto loans

The same is the case with auto loans also, as demand for mid-segment passenger vehicles picking up this fiscal.

Analysts point out that cumulative sales, for passenger vehicles from April to December 2010, were up over 30 per cent year-on-year.

SBI Utsav

While State Bank of India had a three-day SBI Utsav for home purchase recently with over 60 developers showcasing 40,000 apartments in Bangalore, Syndicate Bank too organised a property show in Bangalore, with plans of replicating it in other cities.

Benefits to all segments

The bank had issued 100 on-the-spot sanction letters to prospective home loan seekers with a credit outflow of about Rs 25 crore, according to bank officials.

Syndicate Bank

Syndicate Bank hopes to garner over Rs 200-crore business through this event.

The objective of the event was to ensure that it was a win-win-win for all major stakeholders — buyer, builder and the bank, said Mr G. Ramanathan, General Manager, Syndicate Bank.

SBI – Bangalore Circle too has set its targets high, with plans to record a business of over Rs 500 crore from the three-day event, which will also see auto dealers taking space.

SBI-Bangalore

The Utsav offered home loans with a concession of 0.25 per cent on its home loan interest rates. According to Ms Soundara Kumar, Chief General Manager, SBI – Bangalore Circle, the bank would also set up a lean processing cell that would help it reduce the turnaround time of loan sanctions to four days.

“This lean processing cell would be part of the central processing centre (CPC) for retail assets. The experiment would be started in Bangalore, and if it is successful, it will be extended to other CPCs,” she said. All loan applications for a single project from a developer would be processed here, which would help avoid duplication of processes.

The bank currently has a six-day turnaround time.

Demand for auto loans too

Despite overall credit off-take being low, retail loans such as home loans and auto loans are picking up in this region, said Ms Kumar.

Auto loans too, especially the mid-segment passenger vehicle segment, are doing well, as tie-ups with dealers have helped push the auto loan demand, she added.

Corporation Bank

Corporation Bank, too, has seen a good growth in its retail portfolio during the first two quarters of this fiscal. The bank's retail portfolio registered a 27 per cent growth to touch Rs 2,785 crore as on September 30, 2010.

According to the bank's Chairman and Managing Director, Corporation Bank also received a good response for its festival offer for retail loans launched in September.

The bank had targeted Rs 1,000 crore through the four-month-long offer, but hopes to reach a total of Rs 1,500 crore of retail credit through the offer, he said.

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