RBI eases valuation norms for home loans of up to Rs10 lakh

Reserve Bank of India (RBI) has directed banks to add stamp duty, registration and other documentation charges to the cost of the house / dwelling unit for the purpose of calculating loan-to-value (LTV) ratio, in cases where the cost of the house / dwelling unit does not exceed Rs10 lakh, in a bid to encourage affordable housing.

Currently, stamp duty, registration and other documentation charges account for around 15 per cent of the cost of a housing unit and banks normally exclude these from the calculation of the cost of the house for lending purpose. Inclusion of these costs in LTV calculation will ease the burden on the borrower to a great extend.

"With a view to encourage availability of affordable housing to such borrowers, it has been decided that in cases where the cost of the house does not exceed Rs10 lakh, banks may add stamp duty, registration and other documentation charges to the cost of the unit for calculating LTV ratio," RBI said in a notification.

"It has been brought to our notice that these amounts form around 15 per cent of the cost of the house and place a burden on the borrowers from economically weaker sections (EWS) and low income groups (LIG)," RBI said while easing the norms.

The RBI also said that in cases of projects sponsored by government, statutory authorities, banks may disburse the loans as per the payment stages prescribed by such authorities, even where payments sought from house buyers are not linked to the stages of construction.

Some banks had made representations that they are not able to extend home loans to the allottees in the project developed by government bodies as the payment schedule prescribed by such authorities are not linked to the stages of construction.