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Subsidised home loans under Prime Minister Awas Yojana (PMAY) have become popular among the middle-class, and are driving loan growth for banks.
“PMAY loans have been one of the drivers for overall growth of home loans. We are witnessing a 20 per cent growth year-on-year in this segment,” Ajay Kumar Srivastava, Executive Director, Indian Overseas Bank, told BusinessLine.
A major factor that attracts middle-income customers to these loans is interest subsidy, he added.
“The scheme is an enabler for the spurt in affordable home loans, and there has been good response,” said J Swaminathan, Chief General Manager, SBI, Hyderabad circle.
The main customers are those who have an annual income in the range of ₹6 lakh to ₹18 lakh under the two middle-income groups of the scheme.
“Now, they have made it mandatory for capturing the information of customers of home loans so that the eligibility can automatically be noted,” said Swaminathan.
Subsidy amount
PMAY loans carry a subsidy amount of up to ₹2.67 lakh, with a much lower interest rate of 6.50 per cent per annum.
The credit-linked subsidy, at 4 per cent, will be available for loan amounts up to ₹9 lakh in the case of middle-income group (MIG) -I and, at 3 per cent, for loans up to ₹12 lakh in the case of MIG-II.
However, banks can sanction home loans more than ₹9 lakh or ₹12 lakh, but the subsidy will be restricted to ₹9 lakh or ₹12 lakh, as the case may be.
For SBI, housing loans, including affordable housing loans under PMAY, have been driving growth in retail advances. In the third quarter ended December 2018, SBI posted a 16.4 per cent growth in its home loan portfolio.
PNB has also been witnessing growth in small-ticket advances in housing, along with other retail loans, which have gone up 15 per cent.
According to a report by the RBI, affordable housing loans (especially housing loans up to ₹10 lakh) have been witnessing robust growth from 2016-17 onwards.
At the same time, the number of beneficiaries of higher-value home loans of above ₹25 lakh have come down.
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