Gross non-performing assets (NPAs) of housing finance companies (HFCs) in their loan portfolio to self-employed borrowers have inched up by 40 basis points to 1.1 per cent by the end of fiscal year 2017-18, compared with 0.7 per cent a few years back.
For HFCs, loans to self-employed borrowers have increased to 30 per cent of their overall home loan portfolio compared with 20 per cent four years ago, primarily driven by government impetus to affordable housing. “But the flipside is, delinquencies are also rising,” rating agency Crisil has said.
To be sure, this is not a broad-based affliction – most lenders are not seeing a significant increase in asset quality pressure.
Loans to this segment have grown at a compound annual growth rate of 33 per cent in the past four years compared with 20 per cent for the overall home loan segment. Home loans outstanding in the self-employed segment is expected to have topped Rs 2 lakh crore by the end of fiscal 2018, Crisil said.
Many new and small housing finance companies have been aggressively catering to the self-employed segment. What’s also pushing the larger HFCs into the self-employed segment is banks ratcheting up presence in the home loans segment because of subdued credit demand from corporates and asset quality pressures.
Krishnan Sitaraman, Senior Director, CRISIL Ratings said: “Several initiatives of both the government and the regulator in the recent past have led to fast growth in home loans taken by the self-employed.”