Need to tweak policies for affordable housing: R Gandhi

Reserve Bank of India Deputy Governor R Gandhi has said some policies need to be tweaked to support the affordable housing segment and the real estate sector as a whole.

"We will review the definition of affordable housing on a regular basis on account of inflation and other factors," he said while addressing a conference here.

He added there was a need for innovation in financial products with respect to loans to cater to the needs of the real estate sector.

"One such product could be saving induced home loan deposit scheme. Customers may be induced to start a saving balance by way of monthly or periodic deposits. This will create a track record for future loan repayment. Once you reach a threshold, the financial institution can think of giving the individual a loan. The balance can be used as a collateral or margin and the financial asset should be used as a base to assess repayment capacity," he said detailing out the product.

He also said there was a need to develop an elaborate data system for the real estate sector as a whole which can in turn be used as a base for taking policy decisions by the regulator.

However, the deputy governor also stressed on the fact that lending to the real estate sector needs to be calibrated as the sector is sensitive. He also stressed on the need for the real estate sector to be supported by a legal institution to represent the orderly growth of mortgage financing.

The government and RBI have come out with steps to boost the infrastructure sector in the past few months and he said more things need to be done to ensure an effective growth of the sector.

In the Budget, the government had said the Real Estate Investment Trusts (REITs) would soon be allowed to bolster the growth in the real estate sector. Apart from this, Rs 4,000 crore was allocated for low-cost housing and Rs 50,000 crore was set aside for urban housing. On the individual front, housing loan rebate on self-occupied property was increased from Rs 1,50,000 to Rs 2,00,000.

On the other hand, RBI has recently exempted banks from maintaining cash reserve ratio and statutory liquidity ratio for funds that are raised through long-term infrastructure bonds for financing affordable housing and the infrastructure sector.

Such loans will be exempted from priority sector lending as well. The move was aimed to boost credit flow to infrastructure and to address the asset-liability mismatch of banks. These moves are expected to push the growth in the real estate sector significantly.

Gandhi also mentioned on the sidelines of the summit that RBI will be coming out with final guidelines on small and payment banks in this financial year itself.