In what could be a letdown for refinance of
housing finance companies by banks, the central bank has reversed its own
directives by removing indirect priority sector lending clause for refinancing
of housing finance companies' HFC debts by banks. The RBI has also reduced the
ceiling for refinance.
The finance ministry had earlier provided
some respite for specialized home loan companies by allowing banks to consider
their refinancing of HFC as priority lending, and increasing the ceiling from
Rs. 5 lakh to Rs. 10 lakh per home. This was done to promote affordable housing
and increase lending to low income group.
But the RBI has tightened the norms for
banks lending to finance companies, and keeping HFC refinancing out of priority
lending regime.
Smaller HFCs get refinancing from banks at
10-11% per year.
