RBI steps to boost credit flow to realty sector
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By PTI |
MUMBAI: In order to increase the flow of funds to the sagging real estate sector, the RBI today announced a slew of measures including a Rs 4,000-crore refinance facility for the National Housing Bank and priority sector status for housing loans up to Rs 20 lakh.
"We are working on a refinance facility for the National Housing Bank (NHB) of an amount of Rs 4,000 crore," RBI Governor D Subbarao said.
According to current norms, a bank has to set aside 40 per cent of its deposits for lending under the priority sector head.
The RBI said banks can classify housing loans up to Rs 20 lakh as "priority sector" advances, subject to a ceiling of 5 per cent of their total priority sector target.
Loans by banks to housing finance companies (HFCs) for on-lending to individuals for purchasing or constructing dwelling units may be classified under the priority sector, provided the housing loans granted by HFCs do not exceed Rs 20 lakh per dwelling unit per family, the statement said.
The special dispensation for treating loans to HFCs as priority sector advances will boost lending to the housing sector, Subbarao said, adding this would apply to loans granted by banks to HFCs up to March 31, 2010.
The RBI has also relaxed asset classification norms for commercial real estate advances to encourage banks to increase their exposure to the sector. "The facilities for restructuring exposures will help soften pressures being faced by the commercial real estate and other sectors in the current environment", the Governor said.
Commenting on the RBI decisions, ICICI Bank Joint Managing Director Chanda Kochhar said, "We have brought down interest rates for housing loans below Rs 20 lakhs."
RBI said that under the existing norms, exposure to commercial real estate, capital market exposures and personal/ consumer loans are not eligible for the exceptional regulatory treatment in retaining the asset classification of the restructured standard accounts in standard category.
"As the real estate sector is facing difficulties, it has been decided to extend exceptional/concessional treatment to the commercial real estate exposures which are restructured up to June 30, 2009," it added.
"We are working on a refinance facility for the National Housing Bank (NHB) of an amount of Rs 4,000 crore," RBI Governor D Subbarao said.
According to current norms, a bank has to set aside 40 per cent of its deposits for lending under the priority sector head.
The RBI said banks can classify housing loans up to Rs 20 lakh as "priority sector" advances, subject to a ceiling of 5 per cent of their total priority sector target.
Loans by banks to housing finance companies (HFCs) for on-lending to individuals for purchasing or constructing dwelling units may be classified under the priority sector, provided the housing loans granted by HFCs do not exceed Rs 20 lakh per dwelling unit per family, the statement said.
The special dispensation for treating loans to HFCs as priority sector advances will boost lending to the housing sector, Subbarao said, adding this would apply to loans granted by banks to HFCs up to March 31, 2010.
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The RBI has also relaxed asset classification norms for commercial real estate advances to encourage banks to increase their exposure to the sector. "The facilities for restructuring exposures will help soften pressures being faced by the commercial real estate and other sectors in the current environment", the Governor said.
Commenting on the RBI decisions, ICICI Bank Joint Managing Director Chanda Kochhar said, "We have brought down interest rates for housing loans below Rs 20 lakhs."
RBI said that under the existing norms, exposure to commercial real estate, capital market exposures and personal/ consumer loans are not eligible for the exceptional regulatory treatment in retaining the asset classification of the restructured standard accounts in standard category.
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"As the real estate sector is facing difficulties, it has been decided to extend exceptional/concessional treatment to the commercial real estate exposures which are restructured up to June 30, 2009," it added.
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