Bad loans in the Gujarat housing sector have more than doubled over the past five quarters. Although its share in total amount disbursed is less than one per cent, the steady rise over quarters is a matter of concern, say industry players. Total amount outstanding at the end of September 2017 stood at Rs 64,339 crore, a rise of 18.28 per cent in a year, bad loans grew steeply by 48.3% to Rs 479 crore in the same period.
According to the report of State-Level Bankers Committee (SLBC) for the July-September quarter for fiscal 2017-18, total amount outstanding in housing loans in Gujarat stood at Rs 64,339 crore, while bad loans measured in terms of Non-Performing Assets (NPA) stood at Rs 479 crore, or 0.74 per cent of the total outstanding loan amount. The NPA in the sector has been steadily rising from the April-June quarter of fiscal 2016-17. Then the total loan outstanding was Rs 52,876 crore, while NPA stood at Rs 224 crore, or 0.42 per cent of total home loan amount, indicating that in the past five quarters while loan amount increased by 21.68 per cent, NPA rose by 114 per cent.
City realtor Vijay Shah, founder of Vijay Builders Pvt Ltd, attributes the trend to the triple effect of demonetisation, Goods and Services Tax (GST) and the Real Estate Regulations Authority (RERA) Act.
"The cascading effect of all the three factors has disturbed the money circulation in the market, leading to rising NPAs," said Shah.
Accordingly, demonetisation and GST have affected the availability of cash with builders and buyers affecting the repayment ability. "The disruption of the cash flow in the market has severely hit the purchasing power of buyers. Many of them are not able to repay because of liquidity crunch. This is causing bad loans to rise," said Shah, who is also a member of the executive committee of the Gujarat Chamber of Commerce and Industry (GCCI), the apex body for trade and industry in Gujarat.
He informed that GST caused the project cost to rise by about 5-7 per cent, forcing realtors to raise prices of housing units. This has again hurt the purchasing power of the prospective buyers.
He, however, feels that things will turnaround close to Diwali, as RERA will eliminate non-serious players and the presence of only professional players will streamline things.
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