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RBI raises cap on home loans
Why is it in the news?
- The Reserve Bank of India (RBI) has increased the eligibility cap on home loans extended by regional rural banks and small finance banks.
- RBI has increased it to ₹35 lakh in metropolitan areas and ₹25 lakh in other centres.
- Earlier, loans to individuals up to Rs 28 lakh in metropolitan centres and Rs 20 lakh in other centres.
More in the news
- 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.
- 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).
- 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:
- Small finance banks are banks with a differentiated bank license from the RBI.
- The objective behind the Small finance banks is to promote financial inclusion.
- They primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections.
- These sections includes small business units, small and marginal farmers, micro and small industries and unorganised sector entities.
- They lend 75% of their total adjusted net bank credit to priority sector.
Source
The Hindu.