The decision of the Reserve Bank of India to rationalise risk weightage on housing loans would play a significant role in boosting demand for the housing sector, said developers and lenders.
Such loans shall attract a risk weight of 35% where the loan-to-value (LTV) ratio is less than or equal to 80%, and a risk weight of 50% where LTV is more than 80% but less than or equal to 90%, the RBI said in its policy statement.
Kamal Khetan, CMD, Sunteck Realty, said tweaks to risk weight norms would “help lenders on the capital adequacy front and enable them to provide more loans.”
“RBI… should also announce steps that are crucial for the sector’s survival and then introduce measures that will aid the sector’s revival,” Satish Magar, President, Credai National.
He said the extension of the moratorium and making all accounts that were SMA 1 or SMA 2 as on March 1, 2020 eligible for restructuring were among Credai’s demands to mitigate COVID-related stress on businesses and which the Centre should consider to help provide support to the distressed sector.
He said the move to extend the co-lending scheme to NBFCs and housing finance companies (HFCs) may infuse additional liquidity; however, strict due diligence norms and eligibility criteria will not benefit the realty sector.
Hardayal Prasad, MD & CEO, PNB Housing Finance, said, “The extension of the co-lending model will help expand leverage capacities of HFCs and unlock value for us. The announcement on risk weights shall give much-needed impetus for the housing sector.”