Even as the general appetite for housing loans dipped in 2008-09, public sector banks registered a growth of over 11 per cent for home loans against the previous year.
According to official data, the exposure of these banks to housing stood at Rs 1,69,142 crore in 2008-09 while it was Rs 1,51,520 crore in 2007-08.
However, bankers said the going was tough after September 2008 as demand for retail credit especially housing had practically dried up.
A chairman of a public sector bank told Hindustan Times that after the global financial crisis deepened, several foreign and private banks slowed down on lending and customers turned to public sector banks.
“Customers also felt more secure with government-run banks as interest rates were relatively lower,” the chairman said.
Between September 2008 and March 2009, overall demand had dropped as the economic slowdown intensified while real estate prices did not soften. In addition, interest rates also went up, impacting the credit flow into the housing sector.
Bank of Maharashtra CMD Allen CA Pereira said that housing loan demand was likely to pick up gradually in the next few months.
“We hope to see a more vibrant credit growth in the coming months as sentiments are improving and property prices are easing,” Pereira said, adding, though earlier the demand was more for sub-Rs 30 lakh loan sizes, now the appetite is growing even for bigger loans of up to Rs 50 lakh.
But what has been worrying the government is the fact that overall growth in housing loans has shrunk in the last three years. In 2008-09, the growth in the housing loan portfolio for scheduled commercial banks was only 6 per cent while it was 12.7 per cent in 2007-08 and 23.2 per cent in 2006-07, reflecting a decelerating trend.
The UPA government has underlined the need to maintain a high growth rate and public sector banks have already been directed to increase credit flow into various sectors, especially housing.