New Delhi: Affordable housing loans will soon become cheaper with the Reserve Bank of India (RBI) extending the ambit of priority sector lending to loans of up to ₹ 35 lakh.
The priority sector lending tag, will not only reduce equated monthly instalments on loans, but will also ensure easier access of bank credit for consumers, especially for the economically weaker sections and lower income groups.
The central bank has increased the housing loan limits for priority sector loans to ₹ 35 lakh from ₹ 28 lakh in metropolitan centres, and to ₹ 25 lakh from ₹ 20 lakh in other centres. However, the overall cost of the residential unit should not exceed ₹ 45 lakh in metros and ₹ 30 lakh in other centres, RBI said during its monetary policy announcement. This will also align the scheme with the housing-for-all scheme of the centre.
A circular in this regard will be issued by the end of this month, said RBI.
The central bank also flagged the rising bad debts in small-ticket loans and warned that regulatory tightening was on the anvil for home loans of up to ₹ 2 lakh.
“After a careful analysis of the housing loans data, it has been observed that the level of NPAs (non-performing assets) for the ticket size of up to ₹ 2 lakh has been high and is rising briskly. Banks need to strengthen their screening and follow up in respect of lending to this segment in particular," the RBI said, adding that it was closely monitoring this sector.
It further said that it will consider appropriate policy response, including “tightening of the loan-to-value ratios and/or an increase in the risk weights, should the need arise."
Banks had lent ₹ 3.75 lakh crore in housing loans classified as priority sector as of 31 March 2018, a growth of only 2% over the ₹ 3.68 trillion in the year-ago period.