RBI Tells Banks: Bring Innovation into Housing Loans..

Consider sanctioning such loans using deposits as collateral, says Mr. R Gandhi
 
Reserve Bank of India (RBI) has called upon banks to bring in more financial innovation into housing loan products by linking such loans to deposits.

According to Mr. R Gandhi, Deputy Governor, RBI, “Savings can be induced to generate savings balance by way of monthly or / periodic deposits. This will serve as a track record for future housing loan products & once it reaches a certain balance, the financial institution can consider sanctioning the housing loan with the balance in the account acting as collateral.”

Mr. Gandhi said the RBI will also periodically review the definition of affordable housing, taking inflation into account,


Further, he mentioned the need to internalise the credit risk originating in the housing sector, particularly the low-ticket housing segment, through proper insurance schemes for banks and other institutions.

Mr. Gandhi asked various stakeholders to ensure timely completion and delivery of projects without escalating the costs. In addition, he highlighted the need to develop an elaborate system for collecting data on real estate and housing activity to facilitate informed policy decisions.

Amid demands from the real estate industry with regard to funding from banks, Mr. Gandhi also asked them to moderate their expectations as banks are ultimately the trustees of public money and it needs to be used efficiently for all sectors.

On differential licensing, Mr. Gandhi said the central bank intends to issue the final guidelines during this financial year after analysing comments & suggestions invited from various stakeholders.


Asked if state - owned India Post will apply for a banking licence, he said the Government has to give its approval & only then can it apply to the RBI. 
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