Who's defaulting more on home loans? Those who borrow less than Rs 2 lakh

MUMBAI: The Reserve Bank of India is looking to tighten norms in low-ticket affordable loan segment by increasing loan to value ratio and increasing risk weight to address rising bad loans in less than Rs 2 lakh ticket size.

“After a careful analysis of the Housing Loans data, it has been observed that the level of NPAs for the ticket size of up to Rs 2 lakh has been high and is rising briskly, said RBI in a statement. “Banks need to strengthen their screening and follow up in respect of lending to this segment.”

The Reserve Bank is closely monitoring this sector. "We will consider appropriate policy response such as a tightening of the LTV ratios and or an increase in the risk weights, should the need arise," said RBI.


There are around 100 housing finance companies and many of them are focusing on low ticket size lending to self-employed customer segment. Assets under management of housing finance companies grew 24% last financial year aided by massive opportunity in affordable housing and slower credit growth by banks.

Some HFCs focusing on the affordable housing segment have shown an above-average increase in delinquencies with gross NPA at 4-5%.

“The uptick in slippages was expected given increasing delinquencies in the loan against property segment, sharper focus on low-ticket-size home loans, and increased lending to the self-employed customer segment,” said Rama Patel, Director, CRISIL Ratings.