By Sethuraman N R and Nishit Navin
BENGALURU (Reuters) – A slew of interest rate hikes by the Reserve Bank of India (RBI) has not dented demand for home loans for Kotak Mahindra Bank, a top official from the bank said, pointing to a robust housing market.
The RBI has increased its main repo rate by 250 basis points since May last year to 6.5%, which banks have been promptly passing on to customers.
“We are not seeing any flattening of growth in the home sales in the (country’s) primary market,” Ambuj Chandna, president of consumer assets at Kotak told Reuters on Thursday.
The home loans and loans against property segment – the Mumbai-based private lender’s largest – grew 29% year-on-year at the end of the third quarter. Overall loan growth was 23%.
“Homes have not become expensive. We’ve seen last two years of unprecedented wage inflation in the country,” he said, adding that income increases have meant that the ability of an individual to afford loans has also increased.
India is set to witness the biggest salary increase in the world in 2023, according to workforce consultancy ECA International.
There have been calls for more rate hikes after India’s annual retail inflation rate in January again rose above the RBI’s upper target limit of 6% after falling below it for two months.
“There will be odd blips (in inflation) here and there… We have to see if it is a pattern or it’s a blip. Right now, we don’t see a pattern,” Chandna said.
Housing sales in the top seven cities in India touched a new peak in 2022, growing 54% from a year ago, according to a report from ANAROCK, an independent real estate services company.
Kotak Mahindra reported a 31% surge in net profit for the quarter ended Dec. 31, aided by healthy loan growth.
State Bank of India, the country’s largest lender, saw a year-on-year growth of around 18% each in the retail and corporate loans segments in the December quarter, while ICICI Bank’s domestic loans grew more than 21%.
(Reporting by Nallur Sethuraman and Nishit Navin in Bengaluru; Editing by Chris Thomas and Janane Venkatraman)
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