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Risk weights reduced for housing loans

CREDIT POLICY

The RBI has reduced the risk weightage assigned to residential housing properties from 100% to 50% to further improve flow of credit to the housing sector.

The release said, "the prudential requirements for housing finance by banks and investment by banks in securitised debt instruments of Housing Finance Companies are liberalised as follows:

• Risk weight of 50 per cent on residential housing properties against 100 per cent stipulated earlier.
• Risk weight of 50 per cent for the purpose of capital adequacy for investments in mortgage-backed securities of residential assets by HFCs supervised by NHB.
• Investment by banks in MBS of housing assets, which include commercial properties, will continue to attract 100 per cent risk weight.
• Investments by banks in MBS is to be reckoned for inclusion in the prescribed allocation of 3.0 per cent (by HFCs supervised by NHB)."

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