Private sector lender Axis Bank has launched a home loan product for households earning as low as Rs 8,000 a month, targeting disbursals of up to Rs 1,000 crore in a year's time, a senior bank official said today.
However, these loans would come at a premium due to higher risk of such borrowers. Accordingly, the bank would lend at 10.75 per cent, which is higher than its normal lending rates for other customers.
"At present, a majority of the organised financial institutions serve only the segment having a monthly income of over Rs 25,000. The market need drove us to create a product like this which will serve a niche segment," said Axis Bank head for consumer lending and payments, Jairam Sridharan.
As against 60 lakh households in the segment with over Rs 25,000 income per month in urban areas, there are 2.5 crore households in the Rs 10,000 to Rs 25,000 income segment, which has nowhere to go for a home loan, he said.
Sridharan said supply-side issues have been taken care of through an increase in launch of affordable housing projects off late and added that 150 projects were launched last year alone.
"We plan to do around Rs 500 crore to Rs 1,000 crore of disbursements during the year," he said.
A salaried person in the targeted income bracket will get the loan at 10.75 per cent, while a self-employed person could get it at 11 per cent interest. At present, the bank lends at base rates of 10.25 per cent to 11.25 per cent.
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