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Housing loan upto Rs 35 lakh to be treated as PSL: RBI
Why in the news ?
- Giving an impetus to the low-cost housing segment,RBI stated housing loans of up to Rs 35 lakh, for dwellings costing less than Rs 45 lakh, will be treated as priority sector lending (PSL).
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- PSL loans are relatively cheaper than market interest rate.
- At present, loans to individuals for up to Rs 28 lakh in metropolitan centres and Rs 20 lakh in other centres, can be classified under priority sector, provided that the cost of dwelling unit does not exceed Rs 35 lakh and Rs 25 lakh respectively.
- The Reserve Bank of India has decided to consider housing loans of up to Rs 35 lakh, for dwellings costing less than Rs 45 lakh, as PSL in order to give a fillip to the low-cost segment.
- However, there is a condition that the overall cost of the dwelling unit in the metropolitan centre (with population of ten lakh and above) and at other centres should not exceed Rs 45 lakh and Rs 30 lakh, respectively, for being classified as priority sector.
- The RBI notification further said that the existing family income limit of Rs 2 lakh per annum for loans to housing projects for Economically Weaker Sections (EWS) and Low Income Groups (LIG) stands revised to Rs 3 lakh per annum and Rs 6 lakh per annum, respectively. This, it added, has been done in alignment with the income criteria specified under the Pradhan Mantri Awas Yojana.
Priority sector lending (PSL)
- Priority sector lending (PSL) is aimed to provide institutional credit to those sectors and segments for whom it is difficult to get credit.
- According to priority sector norms, scheduled commercial banks have to give 40% of their loans (measured in terms of Adjusted Net Bank Credit or ANBC) to the identified priority sectors in accordance with the RBI regulations.
- Categories under priority sector
- Agriculture 18%: Within the 18 percent target for agriculture, a target of 8 percent of ANBC is prescribed for Small and Marginal Farmers.
- Micro, Small and Medium Enterprises 7.5 percent.
- Export Credit: Incremental export credit up to 2 percent for domestic banks and foreign banks with 20 branches and above.
- Education: Loans to individuals for educational purposes including vocational courses upto Rs 10 lakh.
- Housing: Loans to individuals up to Rs. 35 lakh (from earlier 28 lakh) in metropolitan centres (with population of ten lakh and above) and loans up to Rs 25 lakh (from earlier 20 lakh) in other centres for purchase/construction of a dwelling unit per family.
- Social Infrastructure: Bank loans
Source
The Hindu