Mumbai, Oct 9 (UNI) To boost the real estate sector, the Reserve Bank of India ( RBI) on Friday reorganised rules for new home loans.
Under the current regulations, differential risk weights are applicable to individual home loans, based on the size of the loan as well as the loan-to-value ratio (LTV).
"In recognition of the role of the real estate sector in generating employment and economic activity, it has been decided to rationalise the risk weights and link them to LTV ratios only for all new housing loans sanctioned up to March 31, 2022," the RBI chief Shaktikanta Das said, adding that it would give a fillip to the real estate sector, he said.
This move will likely make more credit available to borrowers, particularly for the higher value loans.
LTV means how much the value of the the property a bank can lend to a borrower. If risk weights rise, a bank has to make more provisions and thus the banks’ ability to lend gets restricted.
UNI JS NV SB 1321