Rbi Sets Housing Finance Floor

In a recent circular, RBI has said each bank should compute its share of the housing finance allocation at 3 per cent of its incremental deposits as on the last reporting Friday of March 2000 over the corresponding figure of the last reporting Friday of March 1999.

However, the central bank has clarified that this is the minimum housing finance allocation and that it has no objection to banks exceeding this level, having regard to their resources position.

Banks may deploy their funds under the housing finance allocation in either direct finance, indirect finance or investment in bonds of the National Housing Bank or HUDCO.

 

The RBI guidelines on housing finance state that finance provided for construction of residential houses to be constructed by public housing agencies like HUDCO, Housing Boards, local bodies, individuals, co-operative societies or employers would be treated as housing finance.

Priority is to be accorded for financing construction of housing meant for economically weaker sections, low income group and middle income group.

The guidelines state that housing finance granted by banks to their own employees , housing loans taken over from other lending institutions, or housing finance granted to non resident Indians - direct or through housing finance institutions - would not be treated as bank credit to housing finance.

Also finance for the construction of educational, health, social, cultural or other institutions or centres, which are part of a housing project and which are necessary for the development of settlements or townships cannot be treated as part of housing finance.