Why is it in the news?
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The Reserve Bank of India (RBI) has increased the eligibility cap on home loans extended by regional rural banks and small finance banks.
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RBI has increased it to ₹35 lakh in metropolitan areas and ₹25 lakh in other centres.
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Earlier, loans to individuals up to Rs 28 lakh in metropolitan centres and Rs 20 lakh in other centres.
More in the news
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In order to bring the RRBs and SFBs at a level playing field with other Scheduled Commercial Banks, it has now been decided to enhance the housing loan limits for eligibility under PSL.
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Furthermore, the existing family income limit of Rs 2 lakh per annum eligible for loans to housing projects exclusively for the purpose of construction of houses for Economically Weaker Sections (EWS).
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The Low Income Groups (LIG), is revised to Rs 3 lakh per annum for EWS and Rs 6 lakh per annum for LIG, in alignment with the income criteria specified under the Pradhan Mantri Awas Yojana.
Small Finance Banks:
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Small finance banks are banks with a differentiated bank license from the RBI.
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The objective behind the Small finance banks is to promote financial inclusion.
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They primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections.
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These sections includes small business units, small and marginal farmers, micro and small industries and unorganised sector entities.
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They lend 75% of their total adjusted net bank credit to priority sector.
Source
The Hindu.