SBI beats private peers in home loan disbursement

State Bank of India (SBI), country's largest bank, is expected to end the third quarter (October-December) with a total home loan outstanding of Rs 1,52,905 crore.

The bank is sanctioning about 800 home loans with average sanctions of Rs 150 crore daily, making it the largest player in the retail banking space, once dominated by private players.

The pace of growth in home loans has picked up from daily sanctions of Rs 120 crore in the beginning of the financial year 2014-15 to about Rs 150 crore to a maximum of Rs 250 crore in the third quarter ended December 2014.

The total home loan outstanding of the bank at the end of December 2014 grew by Rs 4,403 crore from the preceding quarter (September 30, 2014) when the bank had reported a home loan outstanding of Rs 1,48,502 crore.

B Sriram, managing director and group executive (national banking group), SBI, told dna, "SBI has 1,405 residential projects where the bank has obtained single title clearance projects... so individual title clearance is not required and sanctions are faster. We are seeing a steady pick-up in the home loan sanctions in the third quarter compared to the first two quarters of the financial year."

Close rival and mortgage finance company HDFC has a home loan book of Rs 1,45,300 crore as on September 30, 2014, about Rs 7,700 crore higher than the preceding quarter, making it the second largest home loan provider. The third quarter numbers of HDFC is yet to be announced.

LIC Housing Finance is the third largest player with total home loans outstanding of Rs 95,310 crore at the end of the second quarter. Country's largest private sector lender, ICICI Bank, has the fourth largest market share. At the end of the second quarter, the bank had Rs 79,255 crore growing by Rs 5,030 crore over the preceding quarter.

While the incremental home loan growth is higher for both ICICI Bank and HDFC, SBI has the highest market share of home loans. With interest rates at similar levels at 10.10% for women home loan customers and 10.15 % for general category, the competition is going to be stiff.

Not willing to give up its turf, SBI has more people engaged in the marketing and sale of home loans. "We have more people on the street now. About 40,000 to 50,000 of the sales and agents of subsidiary companies like the insurance companies are also engaged in the marketing and sale of home loans. Specialised processing centres to process the loans are in place so that the turnaround time is substantially reduced," said Sriram.

According to an analysis undertaken by the European Mortgages Federation and HDFC, the mortgage penetration as a percentage of nominal GDP in India is as low as 9%, while in the United Kingdom, it is as high as 81%, US 69 %, and the other Asian peers like China the penetration is 17% while South Korea ranks high at 36%. The highest mortgage penetration as a percentage of GDP in the world is in Denmark where it is 101%. This shows that there is a huge untapped demand which banks like SBI are tapping into with its huge network of branches.