Gujarat housing sector NPAs up 144% in financial year 2020

AHMEDABAD: Paying home loan instalments has been the bane of many with pay cuts and layoffs after the pandemic. The situation, however, was not easy even before the lockdown. This is evident from 144% jump in housing sector bad loans in Gujarat for the fiscal ended March 31, 2020.
The housing sector gross non-performing assets of banks in Gujarat increased to Rs 1,502 crore in 2019-20 from Rs 615 crore in 2018-19, shows the latest data compiled by the State Level Bankers' Committee (SLBC).

While there was an increase in home loans turning into NPAs, the advances grew by 42%, up from Rs 66,424 crore in 2018-19 to Rs 94,200 crore in 2019-20, adds the SLBC in its report released by the end of June.
‘Slowdown resulted in higher NPAs’
A growth of 42% in home loan advances is a good sign. But, the increase in NPAs is a concern. It could be because business cycles were not favourable in 2019-20. In the MSME sector, the NPAs have galloped and this will certainly reflect on the home loan portfolios because a majority of housing loan clients are affiliated with MSMEs,” said Jaxay Shah, national chairman, CREDAI.
Stating that NPAs in housing loan usually never see such a sharp spike, Maha Gujarat Bank Employees’ Association’s general secretary Janak Rawal explained, “Due to the economic slowdown, unemployment was also on the rise due to which many people, especially young home buyers, would have defaulted on their housing loan repayments and their accounts, as a result were classified as NPAs.”
“Since the economic scenario was not promising, income of people was adversely impacted during the last financial year. As a result, loan repayment capacity of individuals weakened and this consequently led to the mounting of bad loans,” said a banker.