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Raise priority home loan limit to Rs 40 lakh: Assocham

Source: PTI
December 09, 2008 16:16 IST
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In view of high prices of apartments in cities, India Inc on Tuesday asked the RBI to raise the priority sector home loan limit from Rs 20 lakhs to Rs 40 lakh at least in metros- Delhi, Mumbai, Chennai and Kolkata.

Last week, the RBI had allowed the banks to classify housing loans up to Rs 20 lakh as priority sector advance, subject to a ceiling of 5 per cent of their total priority sector target.

"The housing loan limit classified as priority sector advances should be increased to Rs 40 lakh in case of the metro cities, which account for 94 cent of the capital investment made in the sector," the industry body Assocham survey said.

                                     Special package for home loan borrowers

The RBI had stated that "loans granted by banks to housing finance companies (HFCs) for on-lending to individuals for purchase/construction of dwelling units may be classified under priority sector, provided the housing loans granted by HFCs does not exceed Rs 20 lakh per dwelling unit per family".

Of the total 150 CEOs surveyed, 70 per cent said RBI measures would help boost the demand in housing sector to some extent, but the real estate sector still lacks adequate government policy support.

The government on Sunday announced that public sector banks would soon unveil a package for those seeking home loans up to Rs 20 lakh.

About 82 per cent said the risk weight on loans extended to real estate sector needs to be reduced in order to induce banks to lend to the sector.

Majority of the CEOs especially from real estate, steel, cement, automobile and engineering have termed government's stimulus package as 'highly inadequate' for creating demand, retaining and generating jobs for skilled and semi-skilled workforce.

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