ICICI Bank Eyes Rural Market With Cheaper Home Loan

ICICI Bank has launched a rural home loan scheme at its base rate of 9.70 per cent in a move that would help it meet the twin objectives of accessing cheaper funds from National Housing Bank and meeting priority sector lending target of the Reserve Bank of India (RBI). Christened as ICICI Bank saral rural housing loan, the scheme will offer a minimum amount of Rs 5 lakh and a maximum of Rs 15 lakh for 3 to 20 years.

The loan will be on floating interest rate and can be up to 90 per cent of the property value. Customers can avail the loan to purchase, construct or renovate a home in rural areas. As its corporate business has been growing in single digit, the bank has been trying to ramp up presence in retail and rural segments. During the June quarter, retail constituted 43 per cent of the bank’s total advances book, showing a 25 per cent growth.

A year ago, the share of the retail portfolio stood at 29.36 per cent of the overall portfolio. The corporate portfolio grew 9 per cent during the quarter compared with 4 per cent earlier. Domestic corporate loans comprised 29 per cent of total advances, while overseas loan accounted for 24 per cent. The small and medium enterprises business brought in the remaining 4 per cent. ICICI Bank chief executive officer Chanda Kochhar told journalists in an earnings call that the lender was trying to granularise its portfolio. She said home loans were growing at 25 per cent for the lender and car loans at more than 20 per cent.

Vaibhav Agrawal, vice-president of research, banking at Angel Broking, said, “Lower ticket-size home loans have been a viable product for several non-banking finance companies (NBFCs) such as Repco Home Finance and Gruh Finance. Such a product can also help banks meet their priority sector lending targets. Also, it can help banks and NBFCs avail cheaper funding from NHB.�