Kishor Kharat, MD & CEO, IDBI Bank, speaks about the bank’s home loans and growth plans of the portfolio:
IDBI Bank has extended home loans to the tune of Rs33607.22 crore to 244823 accounts as on 30 September 2015. The zonewise book size of the mortgage loan portfolio has put 3 zones on top: West (Rs10,316.05 crore), South (Rs6152.86 crore) and North (Rs5161.01 crore). These 3 zones had stood out during the corresponding period last year too. The total mortgage loan portfolio of the bank has grown by Rs4531 crore, ie, 15.58% over previous year.
Kishor Kharat, MD & CEO, of the bank, says: “The average ticket size as on September 2014 was Rs12.79 lakhs, it has increased to Rs13.72 lakhs as on September 2015. The growth in outstanding portfolio and average ticket size is indicative of the increase in the bank’s reach in non-metro areas, where the prices of property have remained stable. The priority sector housing loan component comprises approximately 50% of the total housing loan portfolio.”
TIE-UPS
The bank has approved housing projects of 855 builders across the country. However, it is not mandatory that housing loans will be extended only to the approved housing projects. Kharat says there has been a decrease in the demand directly from builders for financing the properties in their projects through home loans in Q2 2015-16 over the corresponding period of previous year. This could be on account of increased prices of properties, delayed completion of projects and other economic factors, says he.
INTEREST
The rates of interest on mortgage loans have not undergone any change in Q2 2015-16. Home loan, which has the largest share in the mortgage loan portfolio of the bank, is offered at prevailing base rate. The base rate of the bank was reduced by 25 bps on 11 May 2015 and again by 25 bps on 5 October 2015.
CUSTOMER SATISFACTION
IDBI Bank organizes credit camps and meetings to familiarize the customer about products and services offered by the bank at regular intervals. Besides, meetings and get-togethers of representatives of various business segments are also held to understand the specific requirements and to explain the bank’s offerings. Customer satisfaction is measured in terms of customer complaints on account of deficiency in service. The number and nature of customer complaints received are closely monitored by the top management at regular intervals. The bank proactively approaches the customers intimating them about the new product offerings and services.
Says Kharat: “As a part of the customer retention tool, we offer additional loan facility in the form of top-up loans at the base rate. Moreover, our officers monitor the movement of the customers and approach them on regular basis based on the data as received from various sources.”
TECHNOLOGY
The bank has launched an automated loan processing system. Customers can apply for loans online through the link available on the website of the bank. They can also track the status of the loan application through the same link. “An initiative has been taken to link the on-line loan applications with loan processing system to facilitate providing provisional sanctions in the lesser TAT. It is also proposed to develop mobile apps for on-line loan applications. The share of on-line applications for mortgage loans during Q2 2015-16 was 1.19%,” says Kharat.
NPA
The gross NPA level in the mortgage loan segment has not increased as on September 2015 as compared to September 2014. The NPA has declined to the tune of 0.12% on yoy basis. The NPA level in the home loan segment has declined 0.05% and the reduction is due to proper due diligence and commensurate recovery efforts, says Kharat
TARGETS
The bank is targeting to grow the mortgage loan portfolio by 10% during FY 2015-16. It utilizes the digital platform for publicizing the mortgage loan products on a regular basis. “To meet the growth target, we have launched a special festival offering under Autumn Bonanza with reduced interest rates. We are using various media for publicising and marketing this offer,” says Kharat.
The bank offers a customized product – housing finance scheme for rural/semi-urban locations for customers in tier 2 & 3 locations. Kharat hope to see an increased demand for this product soon. He also perceives that the existing level of mortgage loans in metros would remain unchanged and that in tier 2 and 3 cities it is likely to improve.
