SBI eyes doubling of mortgage portfolio in 5 years

Dinesh Khara, chairman, SBI, told reporters on Wednesday that the lender’s home loans, a segment it dominates with a 33% market share, has touched Rs5 trillion. The portfolio stood at ₹4.84 trillion as on 31 December, and accounted for 23% of the bank’s domestic loans.

Also Read | Inside the third front of the farm agitation

“When it comes to home loan demand, it is a function of the economy and the demographics. You would have observed there is a definite change in the demographic and the younger generation is looking to acquire homes at a much early age as compared to what it was 10 years back,” said Khara.

According to Khara, 42% of the bank’s home loan customers are 40 years old and below. He is hopeful that as this segment of population sees a rise in incomes, their aspirations coupled with the trend of nuclear families will lead to more home purchases and therefore more loans. The current low interest rate regime has also led to people switching from one lender to another and SBI has also benefited from this sensitivity to interest rates.

SBI’s home loans start at 6.8% at present.

“Metro locations are normally very sensitive to interest rates and we have been successful in having about 23% of ₹5 trillion on account of takeover (of loans),” said Khara.

The quality of the bank’s home loans has also added to Khara’s optimism. Only 0.67-0.68% of the lender’s home loan portfolio has turned bad and very few of its customers have opted for a central bank scheme that allowed coronavirus-hit borrowers to get their loan repayment terms altered.

Mortgage loans are seen as one of the safest asset categories by banks not only because of the underlying security but because borrowers understand the consequence of non-repayment that results in losing one’s home.

“Of about 3.9 million-odd borrowers who were eligible to be considered under the RBI’s restructuring plan, only about 10,000-odd customers have actually availed the restructuring option, which is aggregating to about ₹2,500 crore,” said Khara, adding that about 72% of its customers are from the salaried class, with greater wherewithal to repay.

Typically for a borrower, one of the key draws of a private sector loan over their state-owned peers has been the latter’s delay in sanctions and long-winding processes. At SBI, home loans for apartments from builders that have prior approvals, the turnaround time is about five days, the management said on Wednesday.

CS Setty, managing director, SBI, said wherever there is a pre-approved builder project, approvals required for legal clearance and valuation is reduced.

“We are trying to move the builder tie-ups to the Yono platform (the bank’s mobile application) where the customer can directly come and start his/her journey so that even the five-day time can be brought down and pre-approvals can be given in 5-10 minutes,” said Setty, adding that once the stamp duty rules are amended across different states, the bank plans to have an end-to-end digital solution for home loans.