personal loan disbursals down to 4.7%

Growth in personal loans was muted in 2009-10, data from by the Reserve Bank of India’s (RBI) macroeconomic report shows. However, education loan and home loans have not as fared as badly as the rest of the personal loan constituents.
Personal loans grew 4.7% annually as on February 26, 2010, as against a 6.6% growth a year ago. Loans to education sector grew by 31.2% (33.8%) annually while housing loans grew by 8.3% (6.4%).
The Macroeconomic and Monetary Developments in 2009-10 report, is a background to the annual monetary policy statement for 2010-11 that will be announced today.
“Low home loan (teaser) rates helped the growth in disbursements,” said Hatim Brochwala, banking analyst, Khandwala Securities. During the recovery from the global economic downturn, the housing loan segment witnessed a tide of teaser home loan schemes from banks which offered low fixed interest rates in the first few years and floating rates thereafter.
Most of these schemes have been discontinued but some have been revised with changes in interest rates and tenure.
“Teaser rates may not stay for more than 2-3 months as interest rates are going up. So the growth in home loans may come down slightly,” said Brochwala.
Growth in educational loans can also be attributed to higher demand. “During the downturn, many people went for further studies for which they had taken bank loans,” said M Narendra, executive director, Bank of India. “Now that the economy is recovering they can effectively use their higher qualifications pursued during the time of recession,” he said.
“The government has been emphasising on education loans, which is reflected in its guidelines stating that an educational loan can only be rejected by the highest authority. So almost all educational loans applied for are sanctioned,” said C S Jain, head (personal banking), IDBI Bank. Moreover, loans of up to Rs 4 lakh do not need a security, according to RBI guidelines.
The personal loans segment also includes advances against fixed deposits, credit cards and consumer durables.
The credit card segment took a hit due to heightened caution on the unsecured loans front by banks post recession. Issuances were restricted to individuals holding salaried accounts or having multiple relations (fixed deposits account, insurance etc.) with the bank in some cases. This segment declined by 28.3% annually.

Andhra Bank profit up 29 % in Q3

Andhra Bank posted a profit of Rs. 275 crore during the third quarter ended December 31, 2009, a growth of 29.5 per cent over the previous year.
Announcing the results in the absence of Chairman R. S. Reddy at a press conference here on Monday, Executive Director Anil Girotra termed the bank’s performance in the three quarters as “stellar” with the profit zooming to Rs. 806 crore from Rs. 452 crore in the first nine months of the last financial year.
He attributed the growth in Q3 profit mainly to retail credit, which had jumped by 40.73 per cent, with major contribution from housing loans and non-agriculture gold loans.
Disbursement of housing loans was about Rs. 860 crore and gold loans had exceed Rs. 1,000 crore during the current fiscal year so far.
Another healthy achievement was the increase in total income by 14.73 per cent, but the increase in total expenditure was only 10.27 per cent. The bank had also launched India First Insurance Company jointly with Bank of Baroda and Legal and General of the U.K. and the new life insurance company had commenced operations earlier this month, Mr. Girotra said.
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