Reserve Bank of India

As the RBI’s Monetary Policy Meeting is in progress, the real estate sector is hoping to get some relief that could help them in these challenging times and also measures that can help in sustaining demand, especially after COVID-19 scenario. Though experts are saying the repo rates might not change, the hopes are high as in the recent months the Apex bank has taken steps necessary to uplift the sector.

Last month, the central bank rationalized the risk-weight norms and linked home loans with loan-to-value (LTV) ratios only for all new housing loans sanctioned up to March 31, 2022. Earlier, the risk weight percentage was decided by the size of the loan and the LTV ratio. While acknowledging the criticality of real estate in the economic recovery process, the RBI said home loans have a risk weightage of 35% in case the LTV is of up to 80%. The risk weightage will be 50% if the LTV is over 80%, the banking regulator said.

Talking about the need for further steps, Dhruv Agarwala, Group CEO,, &, says, “The RBI has announced several favourable measures this year for the real estate sector; however, more needs to be done such as the decision on Input Tax Credit. The sector will obviously benefit from a further reduction in home loan interest rates but we feel that there is hardly any scope for a further rate cut this year. The sector should try to take advantage of the opportunities arising out of the decisions taken by the RBI over the past few months.”

Maintaining that rationalization of the risk weightage to LTV for all new housing loans was supposed to bring in more credit Yash Miglani, MD