IBA panel recommends Home loan up to Rs 35 lakh should get priority sector tag
By Joseph Samson
Oct 25, 2012
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Banks are looking for strategic changes in the regulation which also includes revision of the definition of home loans under priority sector.

As there has been massive increase in the prices of properties in last few years, Indian Banks' Association Committee (IBA) has recommended Finance Ministry that home loan up to Rs 35 lakh should get priority sector tag.

The regulation suggested by the IBA panel would enable banks to provide home loans at affordable interest rates. And this will also benefit customers in Tier- II and Tier- III towns. Loans given to builders to construct homes costing within Rs 35 lakh a unit would be classified as priority sector. Builders can also get loans at preferential rates and this will lead to growth in the segment where the unit cost is Rs 35 lakh.

Loans provided by banks to categories such as micro and small enterprise, agriculture, education loans, housing loans, micro credit, export credit and weaker sections are classified as priority sector lending.

Mr. G P Sampath Kumar said that the customers find it difficult to pay 20 per cent margin as well as stamp duty, registration and other charges.

The IBA panel also wants that banks should reduce the margin from 20 per cent to 15 per cent that is to fund up to 85 per cent of the house. This would let increase the ability of customers to purchase homes.


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