According to a report published by RBI on ‘Affordable Housing’, loans of up to Rs 2 lakh has come out with the highest level of Non-Performing Assets (NPAs) in home loans due to steep rise in loan disposal and increasing number of beneficiaries in the affordable housing segment. The report further stated that Public Sector Banks (PSB) observed higher NPAs in the sub-Rs 2 lakh housing loans slab compared to housing finance companies in 2016-17 and 2015-16.
In 2016-17, NPAs for housing loans of up to Rs 2 lakh reached a massive 11.9 percent for PSBs. NPAs for housing finance companies in this slab also witnessed a sharp surge from 6.1 percent to 8.6 percent between 2015-16 and 2016-17. NPAs stood at 10.4% for this slab. The total NPAs for housing loans for PSBs and housing finance companies during 2016-17 stood at 1.5 percent and 0.6 percent respectively. The government’s continuous effort to propel affordable housing through key policy measures including incentive schemes, accordance of infrastructure tag and interest subsidy scheme under PMAY (Pradhan Mantri Awas Yojana) have led to an increase in new housing projects in the affordable segment for low income groups. New launches in affordable segment recorded a 10.1 percent growth, YoY in 2016-17. While affordable housing was the only residential segment to record a double digit growth, new launches in mid and high segment fell by 11.7 percent and 26.7 percent, YoY (in 2016-17) respectively.
The RBI said that availability of low cost credit coupled with progressive policies such as RERA is driving demand for affordable housing which may infuse fresh buyer interest in the real estate industry. It further stated that combined efforts of the government and the RBI to augment affordable housing have triggered positive result. However, a number of other factors including dearth of suitable low cost land within the city limits, lengthy clearance and approval process, flaws in development norms and project design and planning is impacting the pace of affordable housing development.