Developers of affordable housing projects are finding it difficult to get increased credit from banks. Reason: Banks are yet to treat loans to budget housing as loans to infrastructure, despite the government according infrastructure status to affordable housing in the 2017-18 Budget. The infrastructure status meant there was no need to maintain any cap on banks’ lending to affordable housing. Also, lower risk weight would be applied to such projects than real estate in general. “Banks cannot lend more that 10 per cent of their balance-sheet to the real estate sector. Most banks had used up their 10 per cent lending to premium real estate projects. The infrastructure status only implies that there is now no cap on banks’ lending to affordable housing,” said Rajesh Krishnan, founder & CEO at Brick Eagle, an incubator of budget housing projects. “It is true that banks are still not lending to affordable housing sector despite the infra status,” he added.
Source : NAREDCO