Keeping in mind ‘housing for all by 2022’ the Finance Ministry has advised banks to lend at least six times more towards housing loan – up to ₹25 lakh during the current fiscal.

Housing loan is categorised into two: priority sector and non-priority sector. Loan to individual up to ₹ 25 lakh (₹15 lakh in cities with population less than 10 lakh and small towns) is categorised under priority sector housing loans.

However, the RBI guidelines do not lay down any preferential rate of interest for such loans.

Home loans growth In a recent meeting called by the Finance Minister Arun Jaitley and attended by heads of both Public & Private sector bank, it was observed that overall housing loan segment grew by 17.5 per cent.

However, growth in the priority sector housing loan was only 5.12 per cent. Jaitley advised the public sector banks (PSBs) to achieve a 30 per cent growth in Priority Sector housing loans, “which are intrinsically secure loans and which are required to provide a stimulus to overall growth.”

NPA down Now, with more banks (both and private) indicating further transmission of repo rate cuts, Finance Ministry officials expect interest rate on housing loan to come down, which will encourage people to take such loans. Official also said that single digit growth in priority sector and overall double digit growth signal more individuals going for loan above ₹ 25 lakh (in metropolitan centres with population above 10 lakh) and ₹15 lakh (in other centres). This also indicates revival in real estate market which is good for overall economy as “real estate segment has multiplier effect,” one official said. There is a double digit growth in overall housing loan and the percentage of bad debts has come down.

Data show that NPA of PSB decreased to 1.25 per cent in 2014-15 from 1.39 per cent in 2013-14.

Only six banks, Bank of Maharashtra, Corporation Bank, Indian Bank, Indian Overseas Bank, Punjab National Bank and Syndicate Bank registered increase in NPA while others have shown improvement by way of reduction in NPAs during the period.

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