Arms is an innovative project of Asset Reconstruction Company of India Ltd (Arcil) has recently got hold of over Rs 1,200 crore worth of unpaid consumer loans in housing and auto segments. The main recovery is of housing loans segment of Rs 1,000 crore given by National Housing Board and ICICI Bank. Currently Arcil is having around Rs 10,000 crore sticky assets which it has acquired from other banks and financial institutions during the last three years of time.
S Khasnobis, managing director and CEO, Arcil, said, “This is the first time that an organized pan-India attempt is being made to recover distressed consumer retail loans. Arms would focus on resolution through dialogue and borrower co-operation, thereby fostering the culture of responsible borrowing and repayment.”
Khasnobis said the resolving strategy adopted by Arms for retail assets will be quite different from Arcil corporate assets’ recovery practice Recovery solution for retail loans segment is carried out after the thorough assessment of the borrowers’ paying capacity and the values of the collaterals. On the other hand, the company will not get hold of unsecured loans like credit and personal loan. “Though we would acquire them, at a much later stage, we will have to deal with them indirectly as it may involve the same borrowers. We will try to work out a resolution for retail assets,” he said.
Arcil’s latest proposal seems to be significant as a rough estimate by Crisil puts the size of bad loans in the retail segment to around Rs 15,000 crore as on March 31, 2008. This amount includes both housing as well as auto loan defaults in the country. Bankers are of view that in the current fiscal the delinquencies in home and auto loan portfolios might rise further because rise in the interest rates, after the regulators have taken strict steps in its latest monetary policy in order to control the rising inflation. As per the figures released by the Reserve Bank of India, as of May 2008, the total unpaid housing loans in India are estimated at Rs 2,62,486 crore.
Wednesday, August 27, 2008
Thursday, August 21, 2008
Union Bank to provide loans for low cost housing scheme for slums
Union Bank of India the public sector will be providing loans towards the beneficiary contribution in the low cost housing loan scheme planned for the urban poor in Bhubaneswar and Puri.
Under the low cost housing scheme project the houses will be built for the slum dwellers in these two cities under the Integrated Housing and Slum Development Program (IHSDP) being executed in Bhubaneswar and Puri municipality. Under the scheme, the Union government will be providing 80 percent of the project cost as grant and the remaining 20 percent will be shared equally by the state government and the beneficiaries. The Union Bank will be giving loan to the beneficiaries towards meeting their contribution in the project, if the beneficiaries want it.
A senior bank official informed that bank will be giving loan to the urban poor and slum dwellers under JNURM at 4 percent differential rate of interest (DRI).
A Sudhakar, DGM, Union Bank in an interview told the Business Standard "We have in principle agreed to provide loans for the low cost housing project under IHSDP for urban poor and slum dwellers being implemented by the Bhuabneswar and Puri municipalities. It is in the initial stage and we are working out the modalities for the proposed initiative".
He said, the bank will give loan at 4 percent rate of interest for construction of houses in these two municipalities.
However the state government will be looking after the activities like identification of the land, preparing the list of beneficiaries, inviting the bid and construction of houses, banks role will be limit to of providing required loan for the beneficiaries.
The beneficiary will have to pay back the loan to the bank within a set time frame of not exceeding 10 years and the bank will be keep the house mortgaged till the loan is cleared.
The bank will file the request for the approval from its corporate head office after the project details of the scheme are obtained from the state government.
Orissa will be the second state after neighboring West Bengal where the bank is extending loans for a housing scheme for the urban slum dwellers. Earlier bank has supported a similar project in Durgapur in West Bengal in the beginning of the current fiscal.
The progress seems to be important as the state government has received the signal from the Union government that the number of houses projected under IHSDP is most likely to increase substantially this year from about 11,000 last year.
Under the low cost housing scheme project the houses will be built for the slum dwellers in these two cities under the Integrated Housing and Slum Development Program (IHSDP) being executed in Bhubaneswar and Puri municipality. Under the scheme, the Union government will be providing 80 percent of the project cost as grant and the remaining 20 percent will be shared equally by the state government and the beneficiaries. The Union Bank will be giving loan to the beneficiaries towards meeting their contribution in the project, if the beneficiaries want it.
A senior bank official informed that bank will be giving loan to the urban poor and slum dwellers under JNURM at 4 percent differential rate of interest (DRI).
A Sudhakar, DGM, Union Bank in an interview told the Business Standard "We have in principle agreed to provide loans for the low cost housing project under IHSDP for urban poor and slum dwellers being implemented by the Bhuabneswar and Puri municipalities. It is in the initial stage and we are working out the modalities for the proposed initiative".
He said, the bank will give loan at 4 percent rate of interest for construction of houses in these two municipalities.
However the state government will be looking after the activities like identification of the land, preparing the list of beneficiaries, inviting the bid and construction of houses, banks role will be limit to of providing required loan for the beneficiaries.
The beneficiary will have to pay back the loan to the bank within a set time frame of not exceeding 10 years and the bank will be keep the house mortgaged till the loan is cleared.
The bank will file the request for the approval from its corporate head office after the project details of the scheme are obtained from the state government.
Orissa will be the second state after neighboring West Bengal where the bank is extending loans for a housing scheme for the urban slum dwellers. Earlier bank has supported a similar project in Durgapur in West Bengal in the beginning of the current fiscal.
The progress seems to be important as the state government has received the signal from the Union government that the number of houses projected under IHSDP is most likely to increase substantially this year from about 11,000 last year.
Thursday, August 14, 2008
FM advised public sector banks not to raise home loan rates in chief’s meet
Finance Minister P Chidambaram in a meet of chiefs of public sector banks has advised the public sector banks not to increase interest rates for home loans up to Rs 30 lakh and lend more to consumer’s even as the Reserve Bank of India is trying to moderate credit growth to contain inflation.
After the meet Chidambaram told the reporters, “(Responding to the monetary policy) Public sector banks have increased their benchmark prime lending rates by 75-100 basis points. Banks have said almost unanimously that it will not impact existing home loans up to Rs 30 lakh, auto loans and education loans”. According to sources banks have been advised by the minister not to raise interest rates for new home loans up to Rs 30 lakh also.
Sources added Chidambaram also requested the banks’ chiefs to increase disbursement of auto loans as well as personal loans by keeping interest rates affordable.
Taking indications from the North Block, most of the banks already have not touch interest rates in the above categories. Some banks such as the Punjab National Bank, which has raised interest rates for existing borrowers in these categories, but has given the assurance that they will re consider these portfolios.
After taking opinion from banks, Chidamabram said credit growth will be rapid this year. He indicated that advances are likely to grow by over 20 per cent, while deposits can be more than 17 per cent.
RBI has hooked the credit growth at 20 per cent and the deposit growth at 17 per cent for the banking sector in 2008-09. “Deposits are growing at a satisfactory rate compared to last year. Advances are higher compared to the last year (in the first quarter),” Chidambaram said.
Most banks have expressed that they are not witnessing any slowdown in credit demand. But, there has been no growth in farm credit due to the relief scheme.
After the meet Chidambaram told the reporters, “(Responding to the monetary policy) Public sector banks have increased their benchmark prime lending rates by 75-100 basis points. Banks have said almost unanimously that it will not impact existing home loans up to Rs 30 lakh, auto loans and education loans”. According to sources banks have been advised by the minister not to raise interest rates for new home loans up to Rs 30 lakh also.
Sources added Chidambaram also requested the banks’ chiefs to increase disbursement of auto loans as well as personal loans by keeping interest rates affordable.
Taking indications from the North Block, most of the banks already have not touch interest rates in the above categories. Some banks such as the Punjab National Bank, which has raised interest rates for existing borrowers in these categories, but has given the assurance that they will re consider these portfolios.
After taking opinion from banks, Chidamabram said credit growth will be rapid this year. He indicated that advances are likely to grow by over 20 per cent, while deposits can be more than 17 per cent.
RBI has hooked the credit growth at 20 per cent and the deposit growth at 17 per cent for the banking sector in 2008-09. “Deposits are growing at a satisfactory rate compared to last year. Advances are higher compared to the last year (in the first quarter),” Chidambaram said.
Most banks have expressed that they are not witnessing any slowdown in credit demand. But, there has been no growth in farm credit due to the relief scheme.
Friday, August 1, 2008
Banks hike floating home loan rates
HDFC and ICICI Bank are the two largest housing finance lenders in the country, have hiked their floating home loan rates by 0.75 per cent, which means a predicted over 12 percent of increase in the overall repayment.
ICICI Bank, biggest private sector lender of the country, has also increased the interest rate for retail fixed deposits by 0.75-1.00 per cent, which will come into effect from August 1.
In addition, bank has also increased its floating reference rate for consumer loans, including for housing by 0.75 per cent with an immediate effect.
Individually, HDFC informed that it has revised its retail prime lending rate on which adjustable home loans rate are benchmarked by 0.75 per cent, will be effective from August 1. With this hike, the floating rate home loans will cost at a minimum of 11.75 per cent for new HDFC customers, meanwhile bank has not touched the fixed rate which remains at 14 per cent.
While ICICI Bank sources said that the revised floating reference rate for its consumer loans will increase to 14.25 per cent, which are 13.5 per cent at present.
ICICI bank sources said fixed rate loans for its customers have been left unchanged. Although bank has announced a hike of 0.75 per cent in its benchmark advance rate, which would now increase to 17.25 per cent from 16.5 per cent currently.
The hike in floating reference rates by the banks means consumers will have to now take out over Rs 1,000 more every month as EMI for a loan of Rs 20 lakh, whose repayment is spread over 20 years. Yesterday few of the banks had announced hike in rates and others are expected to soon follow suit.
Hence on an 11.75 per cent floating rate, the EMI is estimated to work out to around Rs 21,675 per month, up Rs 1,031 from Rs 20,644 at a rate of 11 per cent. This is going to increase an overall additional burden estimated to Rs 2, 50,000 over the 20-year period.
Banks are revising rates in the wake of tight monetary measures announced by the RBI on Tuesday, when it asked the banks to maintain higher mandatory cash reserves with it and also increased its short-term key lending rates for them.
IDBI Bank, another private sector bank has increased its benchmark prime lending rate (BPLR) by 0.50 per cent to 14.25 per cent. As per bank release the increase will come into effect from August 1.
Yesterday Axis Bank hiked its PLR by 0.5 per cent to 15.75 per cent, which came into effect from July 31, while Jammu & Kashmir Bank has hiked its PLR by up to one per cent.
In order to tighten liquidity in the banking system to counter inflation, the apex bank has hiked the short-term inter-bank lending rates (repo rate) and mandatory cash reserve (CRR) by 0.50 per cent and 0.25 per cent, respectively.
According to experts in the coming years home loans can get costlier again as the RBI is expected to further tighten its monetary policy with additional CRR and repo rate hikes.
Other private-sector lenders Bank of Rajasthan (BoR) and Yes Bank has also hiked their BPLRs today by one per cent and 0.5 per cent to 16 per cent and 17 per cent, respectively.
ICICI Bank, biggest private sector lender of the country, has also increased the interest rate for retail fixed deposits by 0.75-1.00 per cent, which will come into effect from August 1.
In addition, bank has also increased its floating reference rate for consumer loans, including for housing by 0.75 per cent with an immediate effect.
Individually, HDFC informed that it has revised its retail prime lending rate on which adjustable home loans rate are benchmarked by 0.75 per cent, will be effective from August 1. With this hike, the floating rate home loans will cost at a minimum of 11.75 per cent for new HDFC customers, meanwhile bank has not touched the fixed rate which remains at 14 per cent.
While ICICI Bank sources said that the revised floating reference rate for its consumer loans will increase to 14.25 per cent, which are 13.5 per cent at present.
ICICI bank sources said fixed rate loans for its customers have been left unchanged. Although bank has announced a hike of 0.75 per cent in its benchmark advance rate, which would now increase to 17.25 per cent from 16.5 per cent currently.
The hike in floating reference rates by the banks means consumers will have to now take out over Rs 1,000 more every month as EMI for a loan of Rs 20 lakh, whose repayment is spread over 20 years. Yesterday few of the banks had announced hike in rates and others are expected to soon follow suit.
Hence on an 11.75 per cent floating rate, the EMI is estimated to work out to around Rs 21,675 per month, up Rs 1,031 from Rs 20,644 at a rate of 11 per cent. This is going to increase an overall additional burden estimated to Rs 2, 50,000 over the 20-year period.
Banks are revising rates in the wake of tight monetary measures announced by the RBI on Tuesday, when it asked the banks to maintain higher mandatory cash reserves with it and also increased its short-term key lending rates for them.
IDBI Bank, another private sector bank has increased its benchmark prime lending rate (BPLR) by 0.50 per cent to 14.25 per cent. As per bank release the increase will come into effect from August 1.
Yesterday Axis Bank hiked its PLR by 0.5 per cent to 15.75 per cent, which came into effect from July 31, while Jammu & Kashmir Bank has hiked its PLR by up to one per cent.
In order to tighten liquidity in the banking system to counter inflation, the apex bank has hiked the short-term inter-bank lending rates (repo rate) and mandatory cash reserve (CRR) by 0.50 per cent and 0.25 per cent, respectively.
According to experts in the coming years home loans can get costlier again as the RBI is expected to further tighten its monetary policy with additional CRR and repo rate hikes.
Other private-sector lenders Bank of Rajasthan (BoR) and Yes Bank has also hiked their BPLRs today by one per cent and 0.5 per cent to 16 per cent and 17 per cent, respectively.
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