The rupee’s fall may have spelled trouble for many segments but non resident Indians (NRIs) are having a ball. Not only are they sending more money home, they are also investing in property, clearly reflected in the loan books of banks and finance companies.
Nearly 15% of mortgage major HDFC’s book (loan outstanding) comprises loans to NRIs (non resident Indians). “The growth in loans to NRIs has been in line with our overall growth. The GCC (Gulf Cooperation Council) contributes the largest share within the segment,” Renu Sud Karnad, managing director, HDFC said. The mortgage lender anticipates 14% growth in its NRI loan segment this fiscal, which is in tandem with its overall growth projections.
Similarly, Kerala-based banks are also witnessing good offtake of loans by NRIs with many firming up promotional plans. Federal Bank will come up a twin offer; my home, my car targeted at overseas Indians where the bank is planning to waive off processing fees charges. “There are also plans to bring down the home loan rate to our base rate 10.2% (from 10.25% to 10.75% now). Many NRIs come down to Kerala from the Gulf now as it’s holiday season out there and also the festive season in the state (Onam),” A Surendran, head, retail and international banking, Federal Bank said.
NRI home loans currently constitute 22.24% of the home loan portfolio of the bank. The bank has seen a sequential growth of Rs 41 crore in its NRI home loan book in the first quarter of 2014 over the fourth quarter of FY 13. It is anticipating a Rs 80 crore business in the home loan segment from overseas India during the second quarter of the fiscal.
Similarly, State Bank of Travancore has seen a sequential growth of Rs 150 crore its home loan book from NRIs between the fourth quarter of last fiscal and the first quarter of FY 14. The bank’s home loan rate is currently pegged to its base rate at 10.25%. Bank officials state that NRIs are an attractive proposition because they take higher amounts of loan when compared to their domestic counterparts. “They earn more and this is reflected in their loan values. While our resident customers borrow loans ranging from Rs 10 to Rs 25 lakh, in case of NRIs it is about RS 50 lakh,” said a senior bank official.
Some bankers are also quick to point out that what is reflected in the books is only the tip of the iceberg. “In regions like Kerala, many non resident Indians fund and register properties in the names of their relatives and other dependants. So a lot of investment is happening in the realty sector in Kerala by NRIs,” said abanker.
