Lending norms eased for affordable housing

Kolkata, West Bengal. Date: 10/07/2014.
Some of the low cost affordable housing projects that are currently on in Kolkata. Finance Minister, Arun Jaitley has announced an allocation of Rs. 4,000 crore for the low-cost housing schemes along with an indication for relaxation of FDI norms in affordable housing. 
Photo: Ashoke Chakrabarty

The Reserve Bank of India (RBI) has eased lending norms for buyers of affordable housing.

Banks are now allowed to include stamp duty, registration fee and other documentation charges in the cost of a housing property for the purpose of calculating LTV (loan to value) ratio. There is a rider, though. The cost of such a dwelling unit should not exceed Rs.10 lakh.

“It has been brought to our notice that these amounts form around 15 per cent of the cost of the house and place a burden on the borrowers from economically weaker sections and low income group,” the RBI said. The relaxation in LTV norms was intended to encourage availability of affordable housing to such borrower, it added.

The RBI also relaxed rules relating to loan disbursal to housing projects sponsored by government/statutory authorities.

Banks are also allowed to disburse loans to such projects “as per the payment stages prescribed by such authorities, even where payments sought from house buyers are not linked to the stages of construction, provided such authorities have no past history of non-completion of projects.”