Home loan outstanding up Rs 10 lakh cr in last 2 years: RBI

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The report of RBI on ‘Sectoral Deployment of Bank Credit’ shows a rise in credit outstanding to the housing sector. Credit outstanding to the housing sector has increased significantly over the past two fiscal years, reaching a record amount of Rs 27.23 lakh crore in March of the current year, according to the report ‘Sectoral Deployment of Bank Credit’.

The growth in housing credit outstanding reflects the resilience and recovery of the residential property market following the COVID-19 pandemic. Factors such as pent-up demand, low interest rates, and supportive government policies have likely contributed to this trend, signaling optimism and confidence in the housing sector’s prospects.

The data from the Reserve Bank of India (RBI) on sectoral deployment of bank credit for March 2024 reveals significant growth in credit outstanding to the housing sector over the past three years. In March 2022, the credit outstanding to the housing sector was Rs 17,26,697 crore. This represents the amount of money that banks had lent to the housing sector, including priority sector housing, and which remained unpaid or outstanding at that time. By March 2023, the credit outstanding to the housing sector increased to Rs 19,88,532 crore. This indicates a substantial growth compared to the previous year, reflecting increased lending activity towards housing projects, mortgages, and related activities. In March 2024, the credit outstanding to the housing sector further rose to Rs 27,22,720 crore. This represents a continued upward trend in lending to the housing sector, with a significant increase compared to both the previous year and March 2022.

This growth in credit outstanding to the housing sector indicates a robust housing market with significant investment and borrowing activity, which can have broader implications for economic growth, employment, and financial stability.

The data provided by the Reserve Bank of India (RBI) on sectoral deployment of bank credit highlights significant changes in credit outstanding towards commercial real estate over the two-year period from March 2022 to March 2024, In March 2022, the credit outstanding towards commercial real estate was Rs 2,97,231 crore. By March 2024, the credit outstanding towards commercial real estate increased to Rs 4,48,145 crore.

The revival of the Indian real estate sector since 2022 can be attributed to a combination of economic factors, government policies, demographic trends, and infrastructure development, all of which have collectively contributed to a resurgence in demand and growth after a prolonged period of sluggishness.

The industry experts anticipate  that the Indian real estate sector will reach a milestone of USD 1 trillion by 2030.

The Indian real estate sector indeed faced significant challenges in recent years due to various factors such as the implementation of new regulations like the Real Estate (Regulation and Development) Act (RERA), the introduction of the Goods and Services Tax (GST), demonetization, and a general trust deficit caused by instances of developers failing to deliver projects after receiving payments from customers. These disruptions led to a period of stagnation and uncertainty in the real estate market, impacting both developers and homebuyers.

CREDAI (Confederation of Real Estate Developers’ Associations of India) and NAREDCO (National Real Estate Development Council) are influential industry bodies representing real estate developers and stakeholders in India. Their demand to increase tax incentives on home loans is aimed at stimulating housing demand and boosting the real estate sector. Increasing the tax deduction on interest payments for home loans from the current limit of Rs 2 lakh to Rs 5 lakh, the proposal to increase the tax sops on home loans reflects the effort by industry bodies like CREDAI and NAREDCO to collaborate with the government in addressing challenges and unlocking the growth potential of the real estate sector.