Rbi Unveils Computation Norms On Bank Allocation For Housing

The Reserve Bank of India has decided on the allocation for housing finance for commercial banks during 1997-98.

In a recent circular to all commercial banks, the apex bank has said that each bank will have to compute its share of the housing finance allocation at 1.5 per cent of its incremental deposits as on the last reporting Friday of March 1997 over the corresponding figure of the last reporting Friday of March 1996.

However, this norm will be followed only when the amount thus arrived at is higher than the housing finance allocation of each bank for fiscal 1996-97, otherwise the housing finance allocation for fiscal 1996-97 will be applicable.

 

These rules, however, fix the minimum level for housing finance allocation of a bank and RBI has clarified that it has no objection to a bank exceeding this level if its resources permit.

The apex bank has instructed banks to submit the final figures of deposits as on the last reporting Friday of March 1996 and 1997.

The Reserve Bank has also asked banks to submit the figures for housing finance allocation (representing 1.5 per cent of the increase in deposits during this one year period) applicable to each bank for fiscal 1997-98 within 15 days of receiving the circular.

According to an earlier circular sent by RBI to all banks, dated August 2, 1996, banks may deploy their funds under the housing finance allocation in any of the three categories of direct finance, indirect finance or investment in bonds of National Housing Bank or Hudco or a combination of the two. This instruction will remain unchanged in fiscal 1997-98. Housing finance loans given by banks, which will be considered as priority sector advances, are as follows:

A) For direct finance:

nLoans up to Rs 3 lakh for construction of houses by individuals

nLoans up to Rs 50,000 for repairs to damaged houses owned by individuals

B) For indirect finance:

Assistance given to any governmental agency for construction of houses or for slum clearance and rehabilitation of slum dwellers subject to a ceiling of Rs 3 lakh of loan amount per housing unit

Assistance given to a non-governmental agency approved by the National Housing Bank for the purpose of refinance for construction of houses or for slum clearance and rehabilitation of slum dwellers subject to ceiling of loan component of Rs 3 lakh per housing unit

inance provided by banks as housing loan will not be eligible for refinance from the Reserve Bank of India. Housing finance of some specific categories will not, however, be eligible to be counted as part of a banks housing finance allocation according to RBI guidelines.

These categories are:-

Housing finance granted by banks to their own employees

Housing finance granted to Non-Resident Indians (NRIs) direct or through Housing Finance Institutions

Housing loans in excess of Rs 3 lakh provided in semi-urban/rural areas or in excess of Rs 10 lakh in urban/metropolitan centres

Finances granted for purchase of plot only, where the borrower proposes to construct the house by raising funds from his own sources or where the borrower purchasing a plot does not plan to construct a house.