NHB increases provisions on retail home loans

MUMBAI: National Housing Bank (NHB) has increased provisions on standard assets from 0.1% to 0.4% on retail home loans given by housing finance companies. This was indicated by R V verma speaking at the sideline of a seminar on inclusive growth by Skoch. He said that NHB has yet not finalized the date from which the new norm would be effective.

For country’s largest home loan provider HDFC, the impact would be to the tune of Rs 140 crore. HDFC officials said that they have already made an excess provision of Rs 310 crore on their books and therefore the new norms will not impact them.

As of now, provisions for non retail loans like developers, loan against property and top-up loans is 0.40%. Following the increase housing finance companies would be at par banks. Meanwhile, Verma said that high property prices and increase in interest rates have affected demand for home loans.

He was speaking at the Skock Summit on inclusive growth in Mumbai. Verma indicated that slack in demand has affected builders also. “Inventory of housing projects is piling up,” he said. When asked if NHB would be looking at reviewing in benchmark rate at which iprovides cheaper finance to housing finance companies he said that there is no immediate plans to increase rates now.