Mumbai: ICICI Bank has decided to split its home loan business between the bank and its wholly owned subsidiary, ICICI Home Finance Company. The bank proposes to fund home loans only up to Rs 20 lakh, which qualify as priority sector lending. Home loans above Rs 20 lakh would be provided by ICICI Home Finance. Housing loans up to Rs 20 lakh carry a lower risk weight of 50 % for capital allocation purpose. Banks are required to direct 40 % of their loans towards priority sector, including agriculture and small-scale industries. Larger ticket-size loans carry a higher risk weight of 75 %.
The bank has recently received approval from the Reserve Bank of India (RBI) to infuse capital into the home finance company. Following this, the bank has invested Rs 500 crore in the company, taking the net worth of the company to Rs 800 crore at the end of December 2007. ICICI Bank is going ahead with a separate subsidiary for home finance, while public sector banks such as State Bank of India, Canara Bank and Punjab National Bank are considering merging their subsidiaries with themselves. Housing loans up to Rs 20 lakh form about 60 % of the banks'' mortgage portfolio. The average home loan ticket size is around Rs 10 lakh.
The total assets of the housing finance company stood at Rs 4,610.78 crore at the end of March 31, 2007. In the third quarter of 2007-08, the home finance company booked less than Rs 1,000 crore of home loans. ICICI Bank''s home loan book grew 12 % year-on-year to around Rs 60,000 crore at the end of December 2007. If the disbursement done at the end of the quarter in the home finance company were to be included, the growth in the home loan portfolio would be around 13-14 %.
The bank has recently received approval from the Reserve Bank of India (RBI) to infuse capital into the home finance company. Following this, the bank has invested Rs 500 crore in the company, taking the net worth of the company to Rs 800 crore at the end of December 2007. ICICI Bank is going ahead with a separate subsidiary for home finance, while public sector banks such as State Bank of India, Canara Bank and Punjab National Bank are considering merging their subsidiaries with themselves. Housing loans up to Rs 20 lakh form about 60 % of the banks'' mortgage portfolio. The average home loan ticket size is around Rs 10 lakh.
The total assets of the housing finance company stood at Rs 4,610.78 crore at the end of March 31, 2007. In the third quarter of 2007-08, the home finance company booked less than Rs 1,000 crore of home loans. ICICI Bank''s home loan book grew 12 % year-on-year to around Rs 60,000 crore at the end of December 2007. If the disbursement done at the end of the quarter in the home finance company were to be included, the growth in the home loan portfolio would be around 13-14 %.
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