Affordable housing loans will soon become cheaper with the Reserve Bank of India (RBI) extending the ambit of priority sector lending to loans of up to Rs 35 lakh. For the first time since January 2014, RBI have hiked the repo rate and reverse repo rate by 25 bps to 6.25% and 6% respectively.
The central bank has increased the housing loan limits for priority sector loans to Rs 35 lakh from Rs 28 lakh in metropolitan centres and to Rs 25 lakh from Rs 20 lakh in other centres. However, the overall cost of the residential unit should not exceed Rs 45 lakh in metros and Rs 30 lakh in other centres, RBI said during its monetary policy announcement.
A circular in this regard will be issued by the end of this month, said RBI.
The bank also flagged the rising bad debts in small-ticket loans and warned that regulatory tightening was on the anvil for home loans of up to Rs 2 lakh. Banks had lent Rs 3.75 lakh crore in housing loans classified as a priority sector as of 31 March 2018, a growth of only 2% over Rs 3.68 trillion in the year-ago period.
