RBI steps up lending inflows into real estate sector

The Reserve Bank of India (RBI) has taken the initiative to implement the recently announced measures to promote housing loans.

Customers can get loans at lower interest
It may be known that this new dispensation will be applicable to all housing loans to be sanctioned by 31st March 2022. While banks will have additional capital available to lend to the real estate sector, they will also be able to reduce interest to benefit customers.

Debt will gain momentum in real estate sector
According to the RBI notification issued in this regard, where the loan ie LTV is less than 80% against the value of the house, the risk weight on the new home loan will be 35%. While LTV is more than 80 per cent but less than 90 per cent, the risk weight will be 50 per cent. RBI said that this measure is expected to give impetus to bank loans in the real estate sector. This is important for economic revival in view of employment generation and other industries connected in this area.

This means that the higher provision that banks had to make on each housing loan before the risk would be reduced. This will reduce their burden. A standard asset provision of 0.25 per cent will continue to be applicable to such loans. In this regard, Anarok chairman Anuj Puri said that the LTV ratio is derived by dividing the value of the property by the amount of the loan given.