The home loan hit

MID-TERM REVIEW OF ANNUAL POLICY 2004-05/ GUEST WRITERS: V P SHETTY

V P Shetty

The policy is likely to have a negative impact on the housing sector lending. RBI's proposal to increase risk weight on housing loans from 50 per cent to 75 per cent would have some sort of slowing down impact on disbursements.

"We might see the growth momentum in the sector declining down a bit due to the announcement," he added.

It may be recalled that risk weight on housing loans was pegged at 100 per cent earlier, which was brought down to 50 per cent sometimes back. Now that it has been enhanced to 75 per cent, means that there is still some room.

On the whole the credit policy has been a growth oriented one. Since the rate of interest have not been touched, which was being apprehended by bankers, the increased momentum of credit flow witnessed in the last few months would remain the same.