The RBI on Wednesday revised housing loan limits to be eligible for priority sector lending higher to Rs. 35 lakh and Rs. 25 lakh in metro and non-metro cities from the earlier Rs. 28 lakh and Rs. 20 lakh, respectively.
It is to be noted that for raising funds under the scheme, the overall cost of developing the dwelling unit should not be over Rs. 45 lakh in metro cities and Rs. 30 lakh at other centres.
The circular to this effect will be released by the month end by the central bank. Loans extended under the priority lending scheme are cheaper in comparison to the ones offered by banks as part of their usual operations.
After the RBI's statement, Department of Financial Services secretary Rajiv Kumar tweeted, "Big boost to Housing for all. Increase in home loan limits under Priority sector lending to Rs 35 lakh in cities & Rs 25 lakh elsewhere to make such bank loans cheaper".
In another development, homebuyers have been given more powers as they will be treated at par with financial creditors in the process of liquidation of defaulting real estate companies after President promulgates an ordinance.
At the same time, the RBI flagged concerns around rising NPAs in the low-ticket housing loan category and hinted at policy measures to curb their rise. In the 'Developmental and Regulatory Policies' statement the apex bank said, "The Reserve Bank is closely monitoring this sector and will consider appropriate policy response such as a tightening of the LTV ratios and/or an increase in the risk weights, should the need arise".