RBI tweaks norms to boost affordable housing lending

RBI tweaks norms to boost affordable housing lending

News:

  1. RBI has made changes in PSL norms to boost affordable housing.

Important facts:

  1. RBI has increased the loan limit of priority sector lending (PSL).
  2. The change in norms are:
    • For metropolitan areas, loan limits have been raised from Rs 28 lakh to Rs 35 lakh, and
    • For other areas, loan limits have been raised from Rs 20 lakh to Rs 25 lakh.
    • The overall cost of the home does not exceed Rs 45 lakh and Rs 30 lakh respectively.
  3. Banks may tighten loan to value ratio (amount of loan to the total cost of a house) or increase the risk weight if there is a need.
  4. However according to RBI analysis, NPA (Non-performing assets) for housing loan data has been increasing.
  5. To address the issue, banks need to strengthen screening and follow-up measures.
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