The loss of public sector banks' share in the credit market, especially the realty sector, has been the gain for housing finance companies as their share saw doubling in the past three years to 23.81 percent as of June 2019, according to the latest RBI data. The share of builder loans has risen for non-banking lenders and private banks since 2016, as per the Financial Stability Report (FSR) based on the analysis of 310 companies, even as the proportion of public sector banks' (PSBs) exposure to this segment nearly halved.
Over the past four years, total financing to real estate companies nearly doubled to Rs 2.01 lakh crore, shows the FSR released on Friday. Housing finance companies (HFCs) have doubled their share in builder loans to 23.81 percent by June this year, compared with 12.17 percent in June 2016.
Meanwhile, the share of private sector banks rose to 30.41 percent from 23.62 percent, while the exposure of PSBs nearly halved to 24.34 percent as of June 2019, shows the FSR.
"While the aggregate exposure to real estate companies almost doubled to Rs 2.01 lakh crore, the aggregate share of HFCs and private sector banks increased, while public sector banks' aggregate share came down sharply," the report said.
Home financiers have collectively lent around Rs 47,900 crore to builders as of June 2019 up from Rs 12,770 crore in June 2016. But, their exposure in absolute terms did not change much, for state-owned lenders.
"Since September 2018, when the IL&FS-induced risk aversion began, all categories of financial intermediaries have increased their exposures to realtors, the sharpest being that of HFCs," the RBI said.
On the other hand, the system-wide credit losses of banks also jumped from 5.74 percent in June 2018 to 18.71 percent in June 2019. This spike has been led by PSBs, whose impairment has jumped from 15 percent in June 2018 to 18.71 percent in June 2019, the FSR added.
The system-wide losses stood at 3.90 percent in June 2016, and for state-owned banks, it stood at 7.06 percent. The losses saw on a steady rise to 4.38 percent and 9.67 percent, respectively, in June 2017, said the report.
The FSR added that the numbers are based on an analysis of 310 real estate borrowers and the impairment numbers are based on a 90-days past due.
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