RBI rationalises risk weightage on home loans to push demand

RBI rationalises risk weightage on home loans to push demand
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New Delhi: The Reserve Bank of India (RBI ) has come out with a scheme to pave the way for increasing disbursement of loans and keeping interest rates low. These measures are being taken without decreasing the Repo rate, which is the base interest rate, and to increase the liquidity in the market.

The risk weightage conditions of the banks have been revised to lower the interest rates on housing loans. These generous conditions are applicable to loans to be given upto March 31, 2022.

All new housing loan risk will be linked only to the loan to value ratio. The lower the ratio, the lower the risks and borrowers will get the interest rate benefits from institutions.

All non banking financial companies including those in the housing sector have been permitted to join hands with banks for providing loans to the priority sector. This initiative will cause a trigger in the housing sector and real estate sector.

The loan limit for small scale enterprises and personal loans has been raised from Rs 5 lakh to Rs 7.5 lakh. By way of this measure, those applying for fresh loans and those going for top up will receive a bigger amount. The small scale business category comprises of business enterprises with an annual turnover of up to Rs 50 crore.

In order to increase industrial loan disbursement, more funds will be made available to the banks at lower interest rates. The banks have been permitted to take loans having repo rates for a period of up to 3 years. The banks will be able to purchase various bonds of companies. An amount of Rs 1 lakh crore is being set aside for these schemes till March 31, 2021.

Real Time Gross Settlement (RGTS) system meant for smooth transaction of big amounts, will be functional 24/7 throughout the year from December 2020.

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