There is good news for all the homebuyers who intend to own a house of their own. As Reserve Bank, relaxed the risk provisioning norm for housing loan up to Rs 3 million on May 15th.This inturn would make it easier for banks to provide loans for purchase of residential properties. This move is expected to reduce the cost funds of housing loans up to Rs. 30 lakh.
The central bank issued notification in pursuance of the annual credit policy announcement made by the Reserve bank Governor Y V Reddy on April 29. The RBI has modified the provisioning limit for housing loan to take care of the growing property rates mainly in the urban centers. As per the Basel II norms, banks are required to keep 9% of the specified portion of the loan amount as capital.
For up to Rs 3 million housing loan the risk provisioning norm would apply for the 50% of the loan value. Earlier the specified amount was 75% of the loan value between Rs 2-3 million. For loans exceeding Rs 3 million for purchase of residential property, the banks would have to make a risk provision on 75% of the loan amount.
The move would provide the bank additional capital for lending more to housing sector. However, it may not result in immediate softening of interest rate for the housing sector