Owning a house has been brought a little closer to reality for the middle income group in metros.
According to RBI, home loans up to Rs 35 lakh in metros will now qualify for the benefits of priority sector lending. Earlier only housing loans up to Rs 28 lakh were eligible for these benefits.
RBI has done this to bring greater convergence of the Priority Sector Lending guidelines for housing loans with the Affordable Housing Scheme, and to give a fillip to the low-cost housing for the Economically Weaker Sections and Lower Income Groups. Banks have their own Priority Sector Lending (PSL) guidelines and have set limits for them.
The RBI states it has been decided to revise the housing loan limits for PSL eligibility from the existing Rs 28 lakh to Rs 35 lakh in metropolitan centres (with population of 10 lakh and above), and from the Rs 20 lakh to Rs 25 lakh in other centres. However, the house cannot cost more than Rs 45 lakh in a metro and Rs 30 lakh in other centres.
The borrowing may still be subject to the eligibility and other conditions. The RBI has also come out with the observation on the emerging developments in Low Ticket Housing. It states – “After a careful analysis of the Housing Loans data, it has been observed that the level of NPAs for the ticket size of up to Rupees 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 Reserve Bank is closely monitoring this sector and will consider appropriate policy response such as a tightening of the LTV ratios and/or an increase in the risk weights, should the need arise.”