Home Loans up to 20L Declared Under Priority Lending for Banks

By AT Bureau

Reserve Bank of India announced its intention to ease the home loan burden by covering home loans up to 20 Lakh to be treated as priority sector lending for banks. In its cricular (RBI/2007-08/126 UBD.PCB.Cir.No.11/09.09.01/ 2007-08 issued on 30^th August 2007.) the apex bank have given mandate to banks and NBFI involve in housing finance business, to look at need for home finance below 20 Lkah moderately.

Revised guidelines on lending to priority sector for UCBs

As announced in the Reserve Bank's Annual Policy Statement for the year 2005- 06, the prescriptions relating to priority sector lending have been modified and several new areas included from time to time. There is a view that enlargement of areas has resulted in loss of focus. There have also been suggestions for a further review of the eligibility criteria and other related aspects. Further, it is argued that only those sectors that impact large sections of the population, the weaker sections and the sectors which are employment-intensive such as agriculture and tiny and small enterprises should be eligible for inclusion under the priority sector.

Housing loans: Loans up to Rs. 20 lakh to individuals for purchase/ construction of dwelling unit per family, (excluding loans granted by banks to their own employees)and loans given for repairs to the damaged dwelling units of families up to Rs. 1 lakh in rural and semi-urban areas and up to Rs. 2 lakh in urban and metropolitan areas. Family for this purpose means and includes the spouse of the member and the children, parents, brothers and sisters of the member who are dependent on such member, but shall not include legally separated spouse.

Credit Flow to Minorities: UCBs should initiate steps to enhance/ augment flow of credit under priority sector to artisans and craftsmen as also to vegetable vendors, cart pullers, cobblers, etc. belonging to minority communities. The minority communities notified in this regard are Sikhs, Muslims, Christians, Zoroastrians and Buddhists. Within the overall target for priority sector lending and the sub- target of 25 per cent for the weaker sections, sufficient care may be taken to ensure that the minority communities also receive an equitable portion of the credit. Assistance given to any governmental agency for construction of dwelling units or for slum clearance and rehabilitation of slum dwellers, subject to a ceiling of Rs. 5 lakh of loan amount per dwelling unit.

Assistance given to a non-governmental agency approved by the NHB for the purpose of refinance for construction/ reconstruction of dwelling units or for slum clearance and rehabilitation of slum dwellers, subject to a ceiling of loan component of Rs. 5 lakh per dwelling unit also added.