RBI Rationalising Risk Weightage To LTV Ration For All Housing Loans

Dhruv Agarwala, Group CEO, Housing.com, Makaan.com & PropTiger.com. eserve Bank has rationalised the risk weightage to LTV (loan to value) ratio for all new housing loans sanctioned up to March 31, 2022. As per a notification issued by the RBI, new housing loans will attract a risk weight of 35 per cent where LTV is less than 80 per cent and a risk weight of 50 per cent where LTV is more than 80 per cent but less than 90 per cent. Rationalizing the risk weightage to link it to LTV is one more step by the RBI to increase credit flow to the real estate sector. The sector is going to benefit from the steps that have been taken in succession by the apex bank and this comes at an opportune time during the festive season making it all the more beneficial. The sector is one of the largest employers in the country and also contributes significantly to the GDP; the apex bank understands the importance of lending a helping hand to this sector. With the latest decisions, banks will have more capital to lend to participants in this sector giving it a much needed boost.