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The affordable housing segment in India will see a tremendous growth after RBI revised the loan limits. As per the recent reports, the loan limits have been increased from Rs 28 lakhs to Rs 35 lakhs for the affordable housing segment in metropolitan cities, while the same has been revised from Rs 20 lakhs to Rs 25 lakhs in the rest of the cities. Besides increasing the loan limits RBI also decided to utilize the surplus land of the sick public sector undertakings for development of residential projects on them. These two major decisions will boost the development of property market in India.
The overall cost of development of the metropolitan cities is not more than Rs 45 lakhs while that in the other cities is not more than Rs 30 lakhs. With the increase in the home loan limits, the loans will become cheaper. The loan provided by the banks in their normal course of business are generally expensive than the loan provided by the public sector lending. The official circular in this regard will be released by RBI towards the end of the month.
The recent amendments in various acts are providing a lot of relief to the home buyers as well as giving them various preferential rights as well. A new ordinance namely Insolvency and Bankruptcy Code (Amendment) Ordinance Act, 2018 has received a green signal from the president Ram Nath Singh Kovind and will soon be promulgated. The ordinance would provide a significant relief to home buyers by giving them preferential rights as a status of that of creditors. Besides they will even get a right to represent themselves in the committee of Creditors. Buyers have been given the right file a case against the errant developers.
The government even has provided guidelines on the disposal of immovable properties of the sick public sectors companies. This will increase the land parcel and open up new opportunities and thereby reduce the rate of the housing societies coming up. The real estate portals in India are also featuring these lands that are available for sale from the sick PSU’s.
With all the recent amendments brought by the government jointly with the reserve bank of India, the housing sites in India will receive a real boost. They are seeing a considerable growth. The RBI has also mentioned that the number of Non-Performing Assets over the threshold of 2 lakh rupees is very high and is constantly growing. This is an indication of increased risk and the banks should be really careful. Besides, the banks should strengthen their method of evaluation as well as the recovery procedure so that their NPA’s can be kept under control. The Reserve Bank is already considering a policy that will help tighten the LTV ratios and reduce the risk as and when the time arrives.
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