RBI relaxes thresholds for affordable housing finance
Financial Services Division – finserv@vinodkothari.com
The Reserve Bank of India came out with a notification on 19th June, 2018[1] amending the provisions of priority sector lending targets and classification[2], in relation to affordable housing finance. To give a background, financing affordable housing units qualifies to be a priority sector lending. The term “affordable housing unit” us a defined term and this time RBI has brought amendments to it.
The revised thresholds stand as follows:
| Before the notification | After the notification | |
| Units in metropolitan centres | Loans upto Rs. 28 lakhs and the value of the property not exceeding Rs. 35 lakhs | Loans upto Rs. 35 lakhs and the value of the property not exceeding Rs. 45 lakhs |
| Units in other centres | Loans upto Rs. 20 lakhs and the value of the property not exceeding Rs. 25 lakhs | Loans upto Rs. 25 lakhs and the value of the property not exceeding Rs. 30 lakhs |
The intention of this change is to bring the PSL guidelines in line with the Affordable Housing scheme launched by the Government of India.
Further, the other change that has been brought in by the notification is change in the income limits of the EWS and LIG. Earlier, those families with annual household income of upto Rs. 2 lakhs qualified as EWS families and those with annual household income of upto Rs. 3 lakhs qualified as LIG families. The income levels have now been increased to Rs. 3 lakhs and Rs. 6 lakhs for EWS and LIG families respectively.
With this change the provisions of Master Directions on PSL requirements have been synchronised with the Pradhan Mantri Awas Yojana.
[1] https://rbi.org.in/Scripts/NotificationUser.aspx?Id=11308&Mode=0
[2] https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10497
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