The first quarter of 2003 is witness to some major action in the home loans sector -- ICICI Bank has surged ahead of long time market leader Housing Development Finance Corporation.

ICICI Bank's disbursements in the first quarter were at Rs 2,550 crore (Rs 25.5 billion) as against HFDC's Rs 2,092 crore (Rs 20.92 billion), a 21.89 per cent increase.

On the approvals front too ICICI Bank is ahead with approvals of Rs 3,862 crore (Rs 38.62 billion) as against HDFC's at Rs 2,731 crore (Rs 27.31 billion).

The approvals suggests that ICICI Bank may be able to retain their lead in the future too.

"We have been selling our home loans through our bank branches since last year, we are looking all possible channels of growth from franchisees to bank channels. We will also be competitive on the interest rates," said ICICI Bank Home Finance's COO, Rajiv Sabharwal.

ICICI Bank had also taken over the loan book of less than Rs 100 crore (Rs 1 billion) from other players in the first quarter of this year.

HDFC officials point out that what is more crucial is the growth in the loan books, which has been growing steadily at 20-25 per cent for the last 3-4 years.

"Even as our base has been increasing, our NPAs are in control and the cost income ratio is between 13.8-14 per cent. Also the arrangement with HDFC Bank will also bring in more customers," said HDFC officials.  HDFC Bank will start selling HDFC's home loan products from this quarter.

At its recent annual general meeting, HDFC chairman Deepak Parekh said that they were not looking at market share but were interested in profit shares in the housing finance business.

Though HDFC has posted a 30 per cent increase in its disbursements this quarter as against the corresponding quarter of the previous year, ICICI Bank has zoomed ahead with an unprecedented 91 per cent increase for the same period.

ICICI Bank's disbursements were at Rs 1,335 crore (Rs 13.35 billion) in the first quarter of the previous year (June 2002), while HDFC's disbursements were at Rs 1,607 crore (Rs 16.07 billion) for the same period.

For the January -March 2003 quarter, ICICI Bank was ahead in approvals with Rs 3,933 crores (Rs 39.33 billion) as against Rs 3,727 crore (Rs 37.27 billion) made by HDFC.

However, ICICI Bank lagged behind HDFC with disbursements of Rs 2,676 crore (Rs 26.76 billion) as against Rs 3,460 crores (Rs 34.60 billion) posted by the latter.