“Especially in home loans it is important, because HDFC and ICICI Bank were the leaders earlier. Now, SBI is number one. In auto loans it used to be HDFC Bank, in infrastructure finance, there are specialised institutions like IDFC, IIFCL, in SME space there is SIDBI, but everywhere we are number one now,” said Om Prakash Bhatt, chairman of SBI, in an interview to M AIL T ODAY recently.

In the auto loan segment, SBI had gained 44 per cent to Rs 11,594 crore during the 12 months ending September 2009. During the last nine months, SBI entered into tieups with several car manufacturers and their dealers for providing auto finance.

Till recently, HDFC Bank was the leader in disbursing loans in this segment.

HDFC Bank did not respond to an e-mail sent early on Monday. However, Pralay Mondal, retail head of HDFC Bank said auto loan sanctions have seen a revival in October 2009. The bank clocked Rs 1,600 crore of auto loan sanctions during the month, including that of two-wheelers.

In the home loan segment, SBI has seen an annual growth of 23 per cent to Rs 62,338 crore. However, HDFC still has a lead over SBI in the total portfolio of home loans.

“As on September 30, 2009, the loan book stood at Rs 89,519 crore against Rs 81,192 crore in the previous year, an increase of 10 per cent. The corporation sold loans amounting to Rs 6,100 crore during the preceding 12 months. Together with the loans sold, the growth in the loan book would have been higher at 18 per cent,” HDFC said in its latest quarterly results.

ICICI Bank did not respond to an e-mail seeking segment-wise break-up of growth in loans over the last 12 months.

However, its overall loan portfolio has shrunk over 13 per cent in the 12 months ended September 2009, against a 16 per cent growth in the loan book of SBI. After launching the SBI Happy Home scheme in February 2009 with loans at eight per cent for the first year, the monthly average number of home loans sanctioned rose to 22,000 in September from 14,400 in February, the bank said.

Later, SBI has extended this eight per cent loan scheme to the auto, SME and agriculture warehousing sectors.

SBI’s agriculture loan sanctions grew by 21 per cent, with particular thrust on warehousing taking the portfolio to Rs 58,987 crore by September 2009.

In education loans, which are being promoted by the Centre over the last few years, SBI stood first with 42 per cent growth in 12 months at Rs 8,008 crore. The shot in the arm has come from May, 2009, when it brought down the rates, initially beginning at eight per cent.

Credit disbursal of SBI to SMEs was also up by 21 per cent to Rs 95,907 crore. This is one of the priority areas for the Centre, for they provide the largest employment per unit of investment.

SBI’s SME portfolio is bigger than that of SIDBI, which is a nodal agency for SME funding.

SIBDI’s loan book was at Rs 30,073 crore by September 2009.

Growth in corporate loans was at 14 per cent, with total portfolio crossing Rs 1.85 lakh crore by September 2009. Dealogic, a global data provider, had rated SBI as the global leader in five project finance areas for January-September 2009

The country’s largest lender State Bank of India on Friday decided to extend its 8 per cent home loan scheme till March 31, 2010, just a day before it was due to expire. The move is sure to further intensify the already heated competition in the home loan market.

In the past few days banks like Axis Bank and Bank of Rajasthan have launched special scheme for home loan borrowers. Axis Bank came out with a special 8 per cent scheme for the first year and Bank of Rajasthan too dropped home loan rates to 7.5 per cent w.e.f. from November 9 and Punjab National Bank extended its 8.5 per cent scheme till December 31.

The bank, which offers the special scheme under ‘My Home Campaign’, gives 8 per cent fixed interest rate for 5 years for loans up to Rs 5 lakh, with a maximum tenure of 10 years.

These are clear signs of banks renewing focus on the growing home loan market in the country.
With low credit off-take worrying the banking industry, the banks’ continued aggression in the retail space is not surprising especially in the absence of signs of strong demand from the corporates.

Credit off-take dropped to single digits recording 9.6 per cent growth as on October 23. In fact, both the disappointing credit growth numbers and SBI’s move has already got other players thinking of extending their schemes too.
“Such schemes should be continued as it is not a time to withdraw schemes,” said MV Nair, chairman and MD of Union Bank of India.

SBI’s aggression may also force bigger private sector players to relook at their strategy for the fear of losing market share. The customers however are all smiles as the party continues.