The Indian realty sector, which is one of the major contributors to the country’s economy, has been witnessing a dry period due to increasing bank rates. In a bid to curb inflation, RBI has increased lending rates several times since March 2010, thereby putting pressure on banks and forcing them to hike interest rates. The latest announcement by the apex bank therefore comes as a blessing for monetarily weaker sections who bet on banks for housing loans.
Speaking to reporters, RBI deputy governor H R Khan said that the apex bank will try to put housing finance as part of the priority sector.
According to Avinash Gupta, vice president (Research Equity) at Bonanza Portfolio Limited, “As a major part of banks’ earnings come from loans, they are always willing to lend. RBI’s decision will therefore come as a blessing for them. RBI providing more funds to banks will mean that there will be a more steady money inflow and as a result there will be a substantial improvement to the realty sector as a whole with more and more people chipping in with their money.”
Nair committee
A committee is already there to look after the entire process. RBI is hopeful that the report will come by the first week of February.
The committee was set up by RBI to look into various issues related to priority sector. It also included review of loan limits under the segment. The head of the committee is M V Nair. The committee generally looks after issues like desirability of simplifying the approach to direct lending and inconsistencies in existing guidelines, among others.
The Nair Committee for now will be revisiting and revising the current eligibility criteria for borrowers who will be eligible for bank loans under the priority sector segment. The committee will also be reviewing the nature of activities and the types of borrowers before providing loans.
Sambuddha Sengupta |
