Banks will be able to free more funds to lend for affordable housing as the central bank on Tuesday proposed to lower the minimum risk weight on housing loans from the current 50 per cent. "With a view to improve affordability of low-cost housing for economically weaker sections and low income groups and giving a fillip to Housing for All, while being cognizant of prudential concerns, it is proposed to reduce the risk weights applicable to lower value but well collateralised individual housing loans," it said.
The minimum risk weight applicable on individual housing loans is 50 per cent, at present. Detailed guidelines in this regard are being issued separately, the RBI said in its Fourth Bimonthly Monetary Policy statement. "The RBI's proposal to reduce the minimum risk <g data-gr-id="17">weightage</g> on individual housing loans for low-cost homes will also help revive sales," said Property consultant CBRE South Asia CMD Anshuman Magazine. Lowering of minimum risk weight means that banks will have to set aside less capital for affordable housing loans leading to <g data-gr-id="18">availability</g> of more funds for the segment.