RBI raises cap on home loans by SFBs, RRBs

Such loans to get priority sector tag

NEW DELHI, 17/09/2012: The Reserve Bank of India (RBI) on Monday kept the repo rate-the key policy rate-unchanged in its mid quarter monetary policy review, but cut cash reserve ratio (CRR) by 25 basis points to 4.50%. CRR is the portion of deposits that banks keep with the RBI. However, it normally does not earn any interest for banks. The policy action is almost in line with the market expectation. The 25-basis point cut in CRR is expected to release around Rs 17,000 crore into the system. Photo: V.V.Krishnan

The Reserve Bank of India (RBI) has increased the eligibility cap on home loans extended by regional rural banks and small finance banks to ₹35 lakh in metropolitan areas and ₹25 lakh in other centres, provided the overall cost of the dwelling unit in the metropolitan centres and other centres does not exceed ₹45 lakh and ₹30 lakh.

All such loans will be now classified by these banks as priority sector loans.

In addition, the existing family income limit of ₹2 lakh per annum to be eligible for loans for housing projects exclusively for construction of houses for Economically Weaker Sections (EWS) and Low Income Groups (LIG), is revised to ₹3 lakh per annum for EWS and ₹6 lakh per annum for LIG, in alignment with the income criteria specified under the Pradhan Mantri Awas Yojana, the RBI said.