NHB can low the risk weighted for home loans

By Accommodation Times News Service

National Housing Bank (NHB) has thought to low the risk weighted on the home loan and residential housing project in next week to 25 basis points. Through this initiative capital for the housing banks will increase.

Risk weight is capital required to be set aside, stipulated by the Reserve Bank of India for banks, or National Housing Bank for housing finance companies that has to be made by banks for giving the loan. In other words, it is the amount (depicted as percentage of loan disbursed) that institutions need to set aside for assets. The risk weight is a function of the risk perception the apex bank has on loans for different sectors. It is applicable to all categories of retail (personal, home, car and education loans) as well as corporate lending. The one that often impact borrowers directly, and the most, is the risk weight on home loans. Housing finance companies will be able to provide better offer. R. V. Verma , MD and CEO said, through this plan the developers and the home loan borrowers both will be profited. The lenders will also be benefiting the good rates provided by the lenders.

Reserve Bank of India in past on 75lakh home loan provided risk weight of 0.75 decreasing to 0.5%. Also on residential projects risk weighted was lowered from 1% to 0.75%. At present according to the commercial real estate provisions residential housing project has just become a sub-category.

National Housing Bank has hope of 20% increase in this financial year.

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