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Package to revive housing sector may come tomorrow

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Press Trust of India New Delhi

Cheaper loans, full waiver of processing charges and concessions on margin money requirement may find place in the package that is likely to be announced tomorrow to invigorate demand in the housing sector.

"Bankers at a meeting convened by the Indian Banks' Association in Delhi couple of days ago had reached a consensus on disbursing home loans to the bottom of the pyramid. The government is assessing the suggestions received from bankers and is likely to announce the details tomorrow," sources said.

A slew of measures, including reduction in interest rates and exemption from home processing fees up to Rs 5 lakh and also to those in the Rs 5-20 lakh bracket are on cards, sources said.

 

Banks may also bring down margin requirements and there could be some concession on pre-payment, they added.

Sources also said that Reserve Bank of India may relax norms related to risk-weights and margin requirements for home loans, which would enable banks to lend more in these categories.

At present, the risk weight for home loans up to Rs 20 lakh is 50 per cent.

Bankers may also resort to a reduction in their deposit rates in order to reduce their cost of funds, sources said.

"The cost of funds are high for banks given the current high interest rates they are giving for deposits. A reduction in deposit rates is essential to facilitate a lower lending rate regime," a senior banker said.

The government last Sunday while announcing the multi-crore stimulus package to prop up the economy had mentioned about a special package for housing sector and small and medium enterprises.

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First Published: Dec 14 2008 | 5:48 PM IST

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