The State Bank of India's big push will be home loans at a time when corporate credit continues to be muted under the impact of the coronavirus pandemic.
Gearing up to start a co-lending model to expand its footprint in the unorganised sector, SBI has ambitious plans to double its home loan book from Rs 5 lakh crore to Rs 10 lakh crore in the next five years. Offering interest at the lowest rates and launching digital initiatives to improve the efficiencies of home loan delivery are the other measures that the country's largest bank is taking to increase its share from 34% and also expand the market.
The surplus liquidity and poor demand for corporate loans helped SBI to dispense home loans at 6.8% per annum, one of the lowest rates not just in the industry but even cheaper than its once popular teaser loans which were priced at 7.5% in 2008 just after the financial crisis. It was from 2008 that the bank was seriously trying to push its home loan growth, considering the huge network of branches spread across the country.
SBI has also completely waived the processing fee till March 2021 for customers opting for home loans in the bank's approved projects. The bank also plans to work on themes like focused development of the home loan business, refined analytics, easing home loan journey for customers and post disbursal engagement.
"We are onboarding 1,000 customers a day. We feel that combining technology with personalised service is the key in the current scenario. The bank is also working on various digital initiatives to improve the efficiencies in home loan delivery including a unique integrated platform, Retail Loan Management System (RLMS), which will provide an end-to-end digital solution. We have always treated home loans as a growth driver for the nation and not just as mere transactions," SBI chairman Dinesh Khara said.
The co-lending scheme for banks and non-banking financial companies (NBFCs), allowed by the Reserve Bank of India (RBI) in November, brings together two lenders to disburse loans. In an unserved and underserved sector, the credit flow improves and the consumer gains as loans are provided at an affordable cost, made possible through the combination of lower cost of funds from banks and greater reach of the NBFCs.
In the last decade, SBI's home loan book has grown five times. The low interest is helping SBI to attract customers from the rivals, especially the smaller public and private sector banks. Besides, SBI's wide branch network allows it to tap fresh markets.
RBI's latest data, however, shows a slowing of home loans as the pandemic has taken away jobs or reduced salaries. Retail loans, particularly home loans which form the flagship of credit growth for majority of banks, is losing steam. Until December 2020, home loans were growing only at the rate of 8% to Rs 13,93,500 crore, while in the year-ago period it was growing at over 17.6%.
SBI has issued nearly two lakh home loans under Pradhan Mantri Awas Yojana (PMAY) until December 2020. The bank is also designated by the Ministry of Housing and Urban Development as the only central nodal agency for processing PMAY subsidy.
SBI said on Wednesday that to support the government's flagship programme of 'Housing for all by 2022', the bank has been continuously extending home loans under PMAY and has sanctioned 1,94,582 home loans as on December 2020.
With a majority of the bank's customers being government employees and from the salaried class, the non-performing assets (NPAs) in the home loan segment is less than 1%. The Real Estate and Housing Business unit of SBI has grown 5 times in the last 10 years with assets under management (AUM) rising from Rs 89,000 crore in 2011 to over Rs 5 trillion in 2021.
SBI forayed into the home loan business in 2004 with a total portfolio of Rs 17,000 crore. A separate Real Estate and Housing Business Unit (REHBU) came into being in 2012 with a total portfolio of Rs 1 lakh crore. SBI became the market leader in the home loan segment in FY 2014 and has since continued to take rapid strides in this asset segment, achieving the Rs 5 trillion milestone in January 2021.
