Institutional Framework for Housing Finance : Banks

Scheduled Commercial Banks

4.1 Consequent on the announcement made by the Hon’ble Finance Minister while presenting the Budget for the year 1999-2000 about enhancing the availability of bank credit to the housing sector, the RBI decided that, for the financial year 1999-2000 [April-March], each bank should compute its share of the housing finance allocation at 3 % of its incremental deposit [at the least] as on the last reporting Friday of March 1999 over the corresponding figure of last reporting Friday of March,1998. Previously, the RBI had stipulated that during 1998-99, each bank should allocate for housing finance, at least 1.5 % of its incremental deposits as on the last reporting Friday of March 1998 over the corresponding figure of last reporting Friday of March,1997, or the amount of its housing finance allocation fixed for 1997-98, whichever is higher. According to this, the total housing finance allocation for public sector banks for the year 1998-99 worked out to Rs.1480.83 crore. The housing finance allocation for commercial banks during the last five years, has been as under :

Table 4.1: Housing Finance by Commercial Banks
(Rs. in crore)
1994-95 1995-96 1996-97 1997-98 1998-99
Allocation 723.78 927.03 1071.45 1295.19 1480.831
%age increase 30.99 28.08 15.58 20.88 14.33
Disbursal 748.61 842.03 1805.62 1284.00 3951.992
%age increase 76.03 12.48 114.44 (-28.87) 82.79
%age achieved 100.27 90.83 168.52 99.14 158.49
Note 1: Calculated at the rate of 3% of incremental deposits for 1998-99
Note 2: Based on the information received by the Bank from PSBs

4.2 The details of region-wise classification, size-wise classification and population & bank group wise classification of o/s housing loans of scheduled commercial banks are given below :

Table 4.2 : Region-wise classification of O/s Housing Loans of
Scheduled Commercial Banks as on March 31
(Rs. in crore)
Region/State 1997 1998 1999
No. of A/cs Amount No. of A/cs Amount No. of A/cs Amount
Northern Region
Haryana 22865 184.63 23197 199.90 29757 277.14
Himachal Pradesh 6770 47.30 7132 53.13 8621 72.27
Jammu & Kashmir 7327 53.99 7671 70.30 9599 93.41
Punjab 51263 435.53 51098 412.59 50354 446.57
Rajasthan 54888 257.87 55550 324.59 53354 550.48
Chandigarh 5095 68.53 4105 55.35 4520 70.29
Delhi 26777 349.52 26936 378.16 35670 530.94
North-Eastern Region
Arunachal Pradesh 107 1.46 122 1.59 148 1.63
Assam 12796 76.42 12220 95.91 13408 148.74
Manipur 511 4.42 565 5.14 758 7.01
Meghalaya 478 2.94 1017 7.40 812 11.74
Mizoram 68 1.15 309 3.91 429 7.20
Nagaland 260 2.41 192 1.76 408 3.89
Tripura 1176 7.73 1289 8.83 2803 10.15
Eastern Region
Bihar 42399 227.32 49890 304.59 52481 408.59
Orissa 21363 142.56 29649 204.87 24961 265.53
Sikkim 84 0.78 245 1.31 178 2.48
West Bengal 90508 621.22 98017 806.03 107012 948.14
Andaman & Nicobar Islands 142 0.49 155 0.77 129 1.14
Central Region
Madhya Pradesh 47333 326.47 48064 359.91 61907 480.09
Uttar Pradesh 85542 606.31 82828 675.69 115739 886.40
Western Region
Goa 3529 30.68 4220 39.80 5585 54.16
Gujarat 60772 433.85 70392 544.39 91020 693.85
Maharashtra 115498 1236.26 130190 1482.81 152705 1567.04
Dadra & Nagar Haveli 31 0.24 34 0.36 64 0.50
Daman & Diu 96 0.73 157 1.19 169 1.65
Southern Region
Andhra Pradesh 101463 781.29 107521 1049.77 131337 1323.24
Karnataka 82380 634.55 78856 828.56 94849 1192.79
Kerala 87019 622.59 92848 816.86 109747 1036.56
Tamil Nadu 103197 770.88 94070 882.27 114708 1247.09
Lakshadweep 19 0.15 32 0.23 15 0.15
Pondicherry 1596 15.73 1593 13.54 1902 35.86
Total All India 1033802 7946.00 1080164 9631.51 1275149 12376.72
Source: Basic Statistical Returns, RBI

Table 4.3 : Size-wise classification of O/s Housing Loans of Scheduled Commercial Banks as on March 31

(Rs. in crore)
Loan Slab 1997 1998 1999
No. of A/cs Amount No. of A/cs Amount No. of A/cs Amount
Rs.25,000 and Below 441680 496.97 416832 638.80 444593 466.12
Above Rs.25,000 and Upto Rs.2 Lakh 551018 4945.69 589593 5336.03 702483 6526.70
Above Rs.2 Lakh and Upto Rs.5Lakh 35169 880.88 65546 1758.43 115608 3268.61
Above Rs.5 Lakh and Upto Rs.10 Lakh 2964 172.92 5344 319.13 9272 571.58
Above Rs. 10 Lakh and Upto Rs.25 Lakh 2106 238.62 1902 197.41 2162 277.97
Above Rs. 25 Lakh and Upto Rs.50 Lakh 406 114.15 435 116.83 529 141.44
Above Rs. 50 Lakh and Upto Rs.1Crore 201 122.55 255 147.60 258 141.54
Above Rs. 1 Crore and Upto Rs. 4 Crore 173 300.18 180 316.63 163 296.38
Above Rs. 4 Crore and Upto Rs. 6 Crore 40 149.56 37 165.07 34 142.43
Above Rs. 6 Crore and Upto Rs.10 Crore 27 174.73 20 157.08 30 207.58
Above Rs. 1 0Crore and Upto Rs. 25 Crore 18* 349.75* 20* 478.50* 14 206.46
Above Rs. 25 Crore ———- ——— ———- ——— 3 129.91
Total 1033802 7946.00 1080164 9631.51 1275149 12376.72
Source: Basic Statistical Returns, RBI
*In 1997 & 1998 the highest slab was Above Rs.10 crore

Table 4.4 : Population-group and Bank-group wise classification of O/s Housing Loans of Scheduled Commercial Banks as on March 31

(Rs. in crore)
1997 1998 1999
No. of A/cs Amount No. of A/cs Amount No. of A/cs Amount
RURAL
– SBI & Associates 39848 249.77 41779 295.73 34431 311.01
-Nationalised Banks 105236 562.22 118937 698.98 115234 816.44
-Foreign Banks 0 0.00 14 0.21 6 0.20
-RRBs 21281 75.71 24015 95.19 36475 132.84
-Other SCBs 10877 68.88 11969 95.21 9114 99.90
TOTAL 177242 956.58 196714 1185.32 195260 1360.39
SEMI-URBAN ————- ———- ————- ———- ————- ———–
– SBI & Associates 103210 722.50 110905 916.71 105665 1163.83
-Nationalised Banks 129999 725.41 128035 904.56 147059 1220.16
-Foreign Banks 9 0.20 8 0.19 1 0.08
-RRBs 19182 85.19 20129 112.42 41400 130.89
-Other SCBs 29756 191.94 32047 263.20 33009 355.09
TOTAL 282156 1725.24 291124 2197.08 327134 2870.05
URBAN ————- ———- ————- ———- ————- ———–
– SBI & Associates 110692 1045.37 112680 1212.85 125487 1560.02
-Nationalised Banks 175111 1230.33 170031 1401.97 232907 2063.17
-Foreign Banks 465 4.24 410 4.99 57 3.19
-RRBs 12444 92.93 19862 132.24 39159 151.46
-Other SCBs 19239 174.54 19958 226.23 21577 243.13
TOTAL 317951 2547.41 322941 2978.28 419187 4020.97
METROPOLITAN ————- ———- ————- ———- ————- ———–
– SBI & Associates 65155 665.91 67205 769.27 84148 1047.24
-Nationalised Banks 175039 1643.40 181287 2025.47 225531 2431.22
-Foreign Banks 3118 268.79 6283 223.21 9280 347.57
-RRBs 376 4.37 410 5.48 342 5.01
-Other SCBs 12765 134.29 14200 247.38 14267 294.28
TOTAL 256453 2716.76 269385 3270.81 333568 4125.32
All-INDIA ————- ———- ————- ———- ————- ———–
– SBI & Associates 318905 2683.54 332569 3194.57 349731 4082.09
-Nationalised Banks 585385 4161.36 598290 5030.98 720731 6531.00
-Foreign Banks 3592 273.24 6715 228.61 9344 351.04
-RRBs 53283 258.20 64416 345.33 117376 420.20
-Other SCBs 72637 569.66 78174 832.02 77967 992.39
TOTAL 1033802 7946.00 1080164 9631.51 1275149 12376.72
Source: Basic Statistical Returns, RBI

4.3 Several measures taken by the Reserve Bank of India (RBI) during the year reflected its policy of encouraging housing finance by commercial banks. An analysis of the deployment pattern of incremental bank credit during 1998-99 indicates that the priority sector receives a predominant share of total bank credit (40.4 %) followed by medium and large industries (34.7 %) . The remaining 24.9 % of bank credit was distributed among other sectors of which housing cater to the major portion. The relaxation given by the Reserve Bank of India for investments in housing and the demand for white goods enabled the banks to extend credit facilities to other sectors under non-food credit.

State Co-operative Banks

4.4 The co-operative credit structure is an important component of the organized finance system in the country. It comprises the short-term and the long-term credit arms, catering to the needs of production credit and investment credit respectively. The short-term co-operative credit structure comprises of 28 State Co-operative Banks (SCBs) having a network of 779 branches. In certain States, the system has a 2-tier structure with primary agricultural credit societies at the base level supporting the network of SCBs and their branches while in other States there is a 3-tier structure with the primary agricultural credit societies at the base level and the District Central Cooperative Banks (DCCBs) at the district level, with the SCBs at the apex level.

4.5 NHB has been extending refinance assistance to the State Cooperative Banks in respect of the housing loans given by them either directly or through the District Central Cooperative Banks/primary agricultural credit societies. Though the scheme has been in operation since 1989, the refinance disbursed by NHB to these institutions has not been large due to the stipulation of higher recovery norms prescribed under the guidelines not only in respect of the housing loans but also in respect of their other lending. For instance, the recovery is stipulated overall at 40% whereas for housing it is 85%. The cumulative refinance assistance extended by NHB to the State Cooperative Banks as at the end of June, 1999 is Rs.49.89 crore.

Primary (Urban) Co-operative Banks

4.6 Those of the Primary Urban Cooperative banks which are scheduled, are also eligible to avail refinance assistance from NHB provided they meet the recovery norms prescribed by NHB. Like the case of State Cooperative banks, not many primary(urban) cooperative banks have been in a position to avail refinance assistance from NHB. The cumulative refinance assistance extended by NHB to these institutions by the end of June,1999 stood at Rs.17.75 crores and the outstanding was Rs.15.05 crores.