J&K Bank ventures into housing loan sector in Himachal and Punjab. What does this mean for bank’s investors?

8 September 2024

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Srinagar, Sept 8: J&K Bank’s recent initiative to strengthen builder tie-ups outside of Jammu & Kashmir, specifically in areas like Mohali, Shimla, Dharamshala, and Zirakpur, is being seen as a strategic expansion aimed at diversifying the bank’s housing loan portfolio outside of J&K.

Ziraat Times engaged with finance experts and the bank’s officials to understand what this specific real estate venture means for the bank and its finances. Here is what the experts have to say.

Impact on J&K Bank:

By entering new markets in Himachal Pradesh and Punjab, J&K Bank is diversifying its risk and tapping into new customer bases, which can help stabilize the bank’s revenues and growth, especially against economic fluctuations in its primary market in J&K, said Naveen Kumar, a financial analyst.

However, there is a flip side to it – that is the net credit availability within J&K both for priority and non priority sectors.
However, some analysts believe that these tie-ups with builders are likely to boost the bank’s loan distribution capabilities, increasing its business volume in the housing loan segment that is growing especially in Punjab and Himachal areas.

Strengthening its presence in states outside J&K may also help the bank in enhancing the brand visibility and reputation as a competitive player in the northern Indian banking sector, says Syed Fayaz Ahemd, a former bank official.

“By offering services in popular vacation and second-home locations, J&K Bank’s this venture could also help in retaining its existing customers from J&K and Ladakh who might invest in properties in these areas”, Mr Syed added.

About the new tie-ups:

J&K Bank on Friday entered into four strategic builder tie-ups for upcoming housing projects. These collaborations include projects in Shimla and Dharamshala in Himachal Pradesh, and Mohali and Zirakpur in Punjab.

Zonal Head (Kathua) Sanjeev Kumar signed the MoUs on behalf of the Bank, while senior representatives of the builder companies inked the agreements in the presence of Cluster Head (Mohali) Iftikhar Abdullah and other senior officials during a formal event held at the Bank’s Cluster Office in Mohali.

These partnerships significantly expand the Bank’s prospective housing portfolio, now encompassing over 2,000 upcoming housing units across Shimla, Dharamshala, Zirakpur, and Mohali. The move aims to streamline the home loan process and offer the Bank’s customers greater access to different real estate options in both urban and scenic locations.

“These tie-ups are designed to provide our customers with diverse home-buying options at some of the most desirable locations in the region. By simplifying formalities, we aim to make the entire process seamless, allowing customers to focus on finding their perfect second or holiday home,” he said.

Cluster Head (Mohali) elaborated on the benefits of these tie-ups, particularly for customers from J&K and Ladakh who are interested in investing in residential real estate or holiday homes. “With these projects, we are offering our valued customers the chance to invest in quality real estate options, providing them with opportunities to spend their leisure time at prime locations in the hills and plains.”

The projects included in the MoUs are Tara Devi in Shimla, Royal Nest in Dharamshala, Metro Heights in Zirakpur and Jo Shan Heights in Mohali.

During the event, it was also mentioned that the Bank is in the process of securing additional builder tie-ups to provide even more home-buying options for its customers in the near future.