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RBI reduces risk weightage on home loans

The Reserve Bank of India reduced the risk weight on home loans for bank

Apnaloan.com Research Bureau

30 Apr 2008

While the Cash Reserve Ratio (CRR) has been hiked by 25 basis points to 8.25 per cent, home loans up to Rs. 30 lakh may still be cheaper. In its credit policy meeting on April 29, the Reserve Bank of India (RBI) reduced the risk weight on home loans for bank. This means that now banks have to set aside about 50 per cent capital on home loans above Rs. 20 lakh and upto Rs 30 lakhs. The capital required to be set aside earlier was 100 per cent. 

RBI has said that the banks may want to pass on this benefit of reduction to the home loan consumers through lower interest rates.

In May 2007, the RBI had decreased the risk weight on housing loans for up to Rs. 20 lakh from 75 per cent to 50 per cent. Home loans upto Rs. 20 lakh are priority sector loans.