REPORT ON TREND AND PROGRESS OF HOUSING IN INDIA - JUNE, 1999
ASSET QUALITY IN HOUSING FINANCE
6.1 A significant aspect that has been exhibited by the housing finance industry over the years has been the relatively low level of non-performing assets (NPAs) as compared with the other lending activities. However, the proportion of NPAs to total assets of the HFCs approved by NHB for its refinance assistance has shown an increasing trend. The proportion of gross NPAs to total assets of these companies have increased from a level of 2.00% as at the end of March,1997 to 2.09% as at the end of March,1998 and further to 3.09% as at the end of March,1999.
6.2 As at the end of March, 1999 NHB had approved 28 HFCs(excluding HUDCO) for its refinance assistance as compared with 26 HFCs (excluding HUDCO) as at the end of March, 1998. These companies for the purpose of analysis have been grouped according to their asset size and the details are given below:
Table 6.1: Asset Base of Approved HFCs
Asset Size No. of Companies
Upto Rs.50 crore (Group A) 11
Between Rs.50 crore and Rs.150 crore (Group B) 7
Above Rs.150 crore (Group C) 10
(Asset size as on March 31, 1999)
6.3 It is observed that the NPAs of HFCs having an asset size upto Rs.50 crore were 7.72% of the total assets as at the end of March,1997 and this percentage decreased to 6.9 % at the end of March 1998. However, at the end of March,1999 the proportion of NPAs to the total assets of these HFCs increased to 7.64%. A similar trend is observed in the case of net NPAs which declined from 6.36 % of total assets as at the end of March,1997 to 5.71% of total assets as at the end of March,1998. Proportion of Net NPAs to the total assets have increased to 6.65% by the end of March, 1999.
6.4 Similarly, in respect of HFCs having asset size above Rs.50 crore and up to Rs.150 crore also a mixed trend has been noticed. In the case of these companies, the NPAs as a percentage of total assets increased during 1997-98 from the level of 3.01% to 4.58% but decreased during 1998-99 and as at the end of March,1999 the proportion of NPAs to total assets for these companies was 4.05%. The variation in the proportion of net NPAs to the total assets have been similar to the variation observed in the case of proportion of gross NPAs to total assets. It has increased from 2.93% to 4.16% during 1997-98 and declined to 3.31% during 1998-99.
6.5 In the case of companies having an asset size above Rs.150 crore, an increasing trend has been observed in the NPAs as a percentage of total assets. This proportion has incresed from 1.89% at the end of March,1997 to 2.92% as at the end of March,1999. Similarly, the proportion of net NPAs to total assets for these companies increased from 1.73% to 1.79% during 1997-98 and further increased to 2.55% during 1998-99. The details of the above findings are given in table 6.2.
Table 6.2: NPAs for Various Groups of HFCs Classified according to Asset Size
(Rs in Crore)
Group A Group B Group C
1997 1998 1999 1997 1998 1999 1997 1998 1999
Total assets 144.41 201.51 258.91 428.43 521.84 727.40 11389.84 15965.67 18878.71
Gross NPAs 11.15 13.91 19.79 12.90 23.90 29.45 215.33 310.20 551.06
Gross NPAs as % of total Assets 7.72 6.90 7.64 3.01 4.58 4.05 1.89 1.94 2.92
Net NPAs 9.19 11.50 17.22 12.55 21.70 24.08 185.10 265.62 465.68
Net NPAs as % of total Assets 6.36 5.71 6.65 2.93 4.16 3.31 1.63 1.66 2.47
6.6 In terms of the classification of NPAs as per the prudential norms, it is observed that the sub-standard assets account for more than three-fourths of the total NPAs. The share of sub-standard assets in total NPAs which was 79.02% in 1997 marginally declined to 78.29% in 1998 and increased to 79.16% in 1999 (see table 6.3 below). The share of doubtful assets in the total NPAs increased from 20.35% in 1997 to 21.62% in 1998 but declined to 18.76% in 1999. This decrease in the share of doubtful assets is mainly accounted for by the increase in proportion of loss assets from 0.09% in 1998 to 2.07% in 1999. From this, it may be inferred that during the year 1998-99 about 2% of the doubtful assets have converted into loss assets.
Table 6.3: Break-up of Non-Performing Assets
(per cent)
Category/Year 1997 1998 1999
Sub-standard 79.02 78.29 79.16
Doubtful 20.35 21.62 18.76
Loss 0.63 0.09 2.07