In April, bank’s book grew by Rs1,000 crore, in May it is still slower, compared with Rs1,400 crore a month last fiscal.
The discontinuation of State Bank of India’s (SBI) “Easy Home Loan and Advantage Home Loan scheme” — popularly known as teaser loans — has impacted growth in the bank’s home loans.
In April growth in the bank’s loan book was around `1,000 crore, down 28% from the `1,400 crore average growth per month seen in last fiscal.
In May, the number has dropped further, said sources in the know, who did not want to be named. As of May 31, the home loan portfolio of SBI stood at around Rs88,000 crore, one source said.
SBI officials in charge of home loans refused to comment.
The lender’s retail home loan portfolio at the end of the last fiscal, that is March 31, 2011, stood at `86,769 crore. It was up 22% from fiscal 2010.
Signs of a deceleration in teaser loans was visible in April despite the bank continuing with the scheme, analysts said.
In April, SBI’s home loans grew 17.3% year on year despite high real-estate prices and lending rates. That was two percentage points more than the growth seen in March, which was 15%.
Suresh Ganapathy, head of financial research team at Macquarie Securities, said the drop may have begun in April because O P Bhatt, the former chairman of the bank, who had vigorously pushed the teaser loans, retired on March 31 and the new chief Pratip Chaudhuri, who took over from April 1, had a different perspective on it.
The Reserve Bank of India (RBI) had repeatedly frowned at teaser loans during Bhatt’s tenure. Under the teaser scheme, SBI used to charge slightly lower interest rate for the first few years of the loan.
N S Srinath, executive director, Bank of Baroda, said his bank has followed a gradual approach to building up a mortgage portfolio.
“Banks which had clocked a sudden jump in their loan book may see some slowdown,” he said.
Housing Development Finance Corporation (HDFC) and ICICI Bank had discontinued teaser loans in November 2010.
“SBI still has a reasonably large market share,” in home loans, said Vaibhav Agrawal, vice-president (research), Angel Broking.
But Agrawal concedes SBI’s home loan portfolio growth will be slower going forward.
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