Moody's terms easing of housing finance norms by RBI as 'credit negative'

Rating agency Moody’s on Thursday said that the Reserve Bank of India’s move to relax regulatory norms for housing finance may increase the risks for banks. It is credit negative.
 

On June 7, RBI lowered the risk weights and standard asset provisioning on housing loans in select loan-size categories.

The lower capital requirements will weaken banks’ protection from the housing sector, which has grown rapidly in recent years, and will encourage greater lending.
 

Moody’s warned that this growth is occurring as non-bank finance companies increasingly target the home-loan segment, posing greater downside risk if there is a correction in property prices.