Accommodation Times News Services
By Dr Sanjay Chaturvedi
Non Performing Assets (NPA) is flooded in newspaper notices to recover bad loans by banks. Huge stock of budget housing / Affordable housing is in NPA. Public notices and recovery ads or repossession of property ads for such smaller denomination is increasing. Locations like extended suburbs of Ambernath, Badlapur, Thane, Ghodbundar Road, Virar and other areas including Pune, Nashik and Kalhapur are in news for NPA. Rs 30,000 crore worth of loans being put up for auction by state-run banks wanting to spruce up their books; Central Bank tops seller list with Rs 3,500 crore
State-run banks are selling the second-biggest tranche of bad loans in a quarter in an effort to clean up badly strained books and meet government-stipulated performance targets for the year.
Housing financiers are having tough time recovering and coping up with small portfolios. Affordable housing segment and budget housing are worst hit. NPA properties are flooded the market and likely to crash the affordable housing segment. Huge supply already exists and further likely to come up near future to the tune of atleast 10 crore sqft by 2016.
According to National Housing Bank, housing finance market has standard of 2% as bad loan but off late it has gone as high as 17% which alarming. Small and medium flats and apartments are most likely to flood. Assets Reconstruction companies too are not very keen to take these bad assets since it is very difficult to off load such inventory when market is already flooded with supply.
More such bad loans are expected just in November because half yearly closing results will soon be published. Banks are not keen to fund small homes because of high transaction cost and chances it to be converted to bad loans are also very high.