Banks Demand Reduction in Risk weight on Home Loans

January 16, 2009	(Be the first to rate this story!)  Loading ...
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Ahead of Reserve Bank’s quarterly policy review, Indian banks on Thursday asked the apex bank to relax risk-weight norms on home loans upto Rs 20-lakh to reduce their burden. Presently, the risk-weight for housing loans below Rs 20 lakh is 0.75 per cent and the lenders need to make provisioning accordingly while extending advances to borrowres. “They have suggested that the existing risk-weight on home loans to be removed, which would significantly bring down the provisioning burden on banks,” Indian Banks’ Association’s Chief Executive, K Ramakrishnan said.

In a meeting with RBI Governor D Subbarao today, the bankers are also understood to have suggested the Reserve Bank further relaxation in norms related to trade finance to export-oriented firms. “With the global funding sources drying up in the wake of global financial turmoil, there is an increased pressure on Indian banks from all category of comapnies for credit,” he said.

Contrary to the general perception, Indian banks have scaled up their lending this fiscal, Ramakrishnan, who were present at the meeting, said. The average credit growth in the Indian banking system presently stands around 24.5 per cent as against 22.4 per cent in the previous fiscal, with the credit-deposit ratio stands at 74.11 per cent, Ramakrishnan said.

News Published Under:   Banking and Finance |

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