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Reserve Bank of India moots savings-linked loans

Lenders to be more financially innovative in designing home loan products
MUMBAI:Reserve Bank deputy governor R. Gandhi on Wednesday asked lenders to be more financially innovative in designing home loan products and suggested creation of a periodic deposit-linked facility.
“There is a need with respect to financial innovation, with respect to loan products. One such product would be savings-induced home loans or a home loan deposit,” Mr Gandhi told a gathering of realty players here.
Mr Gandhi, who handles banking operations and development at the central bank, said such a product will help lenders understand their customers in a better way on parameters like repayment capacity and also make the margin money available for the property purchase.
“The willing customers may be induced to generate a savings balance by way of monthly or periodic deposits,” he said, adding that home loan can be sanctioned after the deposits reach a certain threshold.
The amount deposited by the customer can act as the margin money for the down payment or as a collateral, he said, adding, if implemented, the lender will get an exact idea about the repayment capacity of the future borrower based on the deposits made during the period.
According to a survey, an investment of over Rs 16 lakh crore per annum is required in India’s realty to achieve the government’s vision of ‘housing for all by 2022’.
According to KPMG – National Real Estate Development Council report, investment in housing needs to be doubled for which there is an urgent need to increase the borrowing limits under the ECB mechanism.
Currently, Rs 9.5 lakh crore is invested in the real estate sector annually, of which about 80 per cent or Rs 7.5 lakh crore is invested in housing development. The report has highlighted the need for increasing the borrowing limit of $1 billion allowed under the ECB mechanism for affordable housing development to $10 billion.
( Source : dc correspondent with agency inputs )
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