Priority sector lending limit hike may boost sale of budget homes

The Reserve Bank’s decision to hike priority sector lending (PSL) slabs will allow first-time home buyers avail higher loans at better terms, which in turn will prop up sales in the affordable housing segment, real estate experts said.

RBI has revised the housing loan limit for PSL to Rs. 35 lakh from Rs. 28 lakh in metros with a population of 10 lakh and above and to Rs. 25 lakh from Rs. 20 lakh in other centres, provided the overall cost of the dwelling unit in the metros and at other centres does not exceed Rs. 45 lakh and Rs. 30 lakh.

“This is a big boost for the first-time home buyers in metros who are looking to buy properties in the affordable segment,” said Anuj Puri, chairman at ANAROCK Property Consultants. “Besides getting subsidy benefits of Rs. 2.68 lakh from the central government under schemes like the Pradhan Mantri Awas Yojna (PMAY), owning a house in the metros will soon become a reality for many.” RBI, however, also raised concerns over the rising delinquencies in this segment and hinted at lesser loan-to value of the property.


Lower home loan interest rates and necessary impetus by the government to affordable housing have helped in pushing sales in this segment. The government has supported the housing sector through affordable housing fund, lower GST rates, increased tenure of loans under Credit-Linked Subsidy Scheme of PMAY and extended I-T benefits to apartments of up to 645 sq ft carpet area.

Khushru Jijina, MD at Piramal Finance & Piramal Housing Finance, also feels that the decision will give a boost to affordable housing sector and help in economic growth.