Housing Loans by Commercial Banks – Loan to Value (LTV) Ratio
“Housing loans by commercial banks – LTV ratio, risk weight and provisioning” wherein it was advised that in order to prevent excessive leveraging, the LTV ratio in respect of housing loans should not exceed 80 per cent. However, for small value housing loans i.e. for loans below Rs. 20 lakh (which are classified as priority sector advances) the LTV ratio should not exceed 90 per cent.
2. In this connection, it has been brought to our notice that banks adopt different practices for deciding the value of the house property while sanctioning housing loans. Some banks include stamp duty, registration and other documentation charges in the cost of the house property. This overstates the realisable value of the property as stamp duty, registration and other documentation charges are not realisable and consequently the margin stipulated gets diluted. Accordingly, banks should not include these charges in the cost of the housing property they finance so that the the effectiveness of LTV norms is not diluted.
Budget has to do something to trigger actions. The fiscal situation has to be viewed in the overall context of the growth risks and the inflation risk.
Finance Minister Pranab Mukherjee has stressed on the need for higher growth to keep inflation and fiscal deficit within manageable levels. He was addressing the representatives of Trade and Industry in New Delhi on Friday during his pre-budget consultation process.
The Finance Minister called for over nine per cent long-term growth in order to achieve the objective of inclusive development in the country. He said the benefits of various development programmes must reach the targeted beneficiaries in the given time frame to ensure that everybody gets due share of development.
About 20 representatives of industry and trade attended the meeting.
State for Finance Namo Narain Meena had told Rajya Sabha in a written reply.
He added that while there has been an increase in the Gross NPAs in absolute terms, the same have recorded lower growth of 24 per cent during the year 2010-11 as compared to 30% during the year 2009-10.
Meena further said that the government has taken a number of measures to improve the health of financial sector, to reduce the NPAs, to improve asset quality of the banks and to create a good recovery climate.
The steps include, "prescribing prudential norms for provisioning and classification of NPAs, guidelines for prevention of slippages, corporate debt restructuring and other restructuring schemes," he said.
“Housing loans by commercial banks – LTV ratio, risk weight and provisioning” wherein it was advised that in order to prevent excessive leveraging, the LTV ratio in respect of housing loans should not exceed 80 per cent. However, for small value housing loans i.e. for loans below Rs. 20 lakh (which are classified as priority sector advances) the LTV ratio should not exceed 90 per cent.
2. In this connection, it has been brought to our notice that banks adopt different practices for deciding the value of the house property while sanctioning housing loans. Some banks include stamp duty, registration and other documentation charges in the cost of the house property. This overstates the realisable value of the property as stamp duty, registration and other documentation charges are not realisable and consequently the margin stipulated gets diluted. Accordingly, banks should not include these charges in the cost of the housing property they finance so that the the effectiveness of LTV norms is not diluted.
Budget has to do something to trigger actions. The fiscal situation has to be viewed in the overall context of the growth risks and the inflation risk.
Finance Minister Pranab Mukherjee has stressed on the need for higher growth to keep inflation and fiscal deficit within manageable levels. He was addressing the representatives of Trade and Industry in New Delhi on Friday during his pre-budget consultation process.
The Finance Minister called for over nine per cent long-term growth in order to achieve the objective of inclusive development in the country. He said the benefits of various development programmes must reach the targeted beneficiaries in the given time frame to ensure that everybody gets due share of development.
About 20 representatives of industry and trade attended the meeting.
State for Finance Namo Narain Meena had told Rajya Sabha in a written reply.
He added that while there has been an increase in the Gross NPAs in absolute terms, the same have recorded lower growth of 24 per cent during the year 2010-11 as compared to 30% during the year 2009-10.
Meena further said that the government has taken a number of measures to improve the health of financial sector, to reduce the NPAs, to improve asset quality of the banks and to create a good recovery climate.
The steps include, "prescribing prudential norms for provisioning and classification of NPAs, guidelines for prevention of slippages, corporate debt restructuring and other restructuring schemes," he said.
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