RBI relaxes loan norms for low-cost housing

Stamp duty, registration to be included while calculating loan-to-value ratio for home loans up to Rs 10 lakh

In a breather for those buying property worth less than Rs 10 lakh, banks have been allowed to add stamp duty, registration and other documentation charges to the cost of the house for calculating the loan-to-value (LTV) ratio.

"It has been brought to our notice that these amounts form around 15 per cent of the cost of the house. These put a burden on borrowers from economically weaker sections and low-income groups," said a notification by the Reserve Bank of India, released late on Thursday.

Earlier, the central bank had asked banks not to include stamp duty and registration charges while calculating the LTV ratio for home loans. Housing finance companies could, however, include these charges while calculating the loan amount.

The apex bank has also relaxed rules disallowing banks from upfront disbursals for innovative housing loan products. "In the context of the stipulation, some banks have said they are not able to extend home loans to allottees in a project developed by government bodies/statutory housing authorities, as the payment schedule prescribed by such authorities are not linked to the stages of construction. Such authorities allot flats to individual allottees with the following payment model: One-time lump sum payment within three months of the allotment; and a time-linked payment plan not linked to the stages of construction," said the notification.

The central bank has allowed this for projects sponsored by the government or other statutory authorities, with a caveat that such authorities have no history of non-completion of projects.