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Rediff.com  » Business » Axis Bank offers home loans for below Rs 10,000 earners

Axis Bank offers home loans for below Rs 10,000 earners

April 03, 2014 10:45 IST


Photographs: Uttam Ghosh/Rediff.com

Private sector lender Axis Bank has launched a home loan product for households earning as low as Rs 8,000 a month, targeting disbursals of up to Rs 1,000 crore (Rs 10 billion) in a year's time, a senior bank official said.

However, these loans would come at a premium due to higher risk of such borrowers. Accordingly, the bank would lend at 10.75 per cent, which is higher than its normal lending rates for other customers.

Tags: Axis Bank

Axis Bank offers home loans for below Rs 10,000 earners


Photographs: Reuters

"At present, a majority of the organised financial institutions serve only the segment having a monthly income of over Rs 25,000. The market need drove us to create a product like this which will serve a niche segment," Axis Bank head for consumer lending and payments, Jairam Sridharan told PTI. 

Axis Bank offers home loans for below Rs 10,000 earners


Photographs: Reuters

As against 60 lakh households in the segment with over Rs 25,000 income per month in urban areas, there are 2.5 crore households in the Rs 10,000 to Rs 25,000 income segment, which has nowhere to go for a home loan, he said.

Sridharan said supply side issues have been taken care of through an increase in launch of affordable housing projects off late and added that 150 projects were launched last year alone.

"We plan to do around Rs 500 crore (Rs 5 billion) to Rs 1,000 crore (Rs 10 billion) of disbursements during the year," he said.

Axis Bank offers home loans for below Rs 10,000 earners


Photographs: Reuters

A salaried person in the targeted income bracket will get the loan at 10.75 per cent, while a self-employed person could get it at 11 per cent interest. At present, the bank lends at base rates of 10.25 per cent to 11.25 per cent.

Sridharan said that the bank has prepared a customised solution which would help it choose the best of borrowers in the segment so as to reduce chances of stress, but he refrained from sharing details of the model to do due diligence on loans.

 

Axis Bank offers home loans for below Rs 10,000 earners


Photographs: Reuters

Launched on the occasion of the 20th anniversary of the bank's foundation, the product is expected to help the bank achieve its priority sector lending (PSL) targets, since the entire portfolio would be treated as PSL, he said.

It may be noted that the only big player present in a segment like this is Dewan Housing Finance and some other NBFCs with similar offerings. 

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