Revised risk weights for new housing loans sanctioned from 16.10.2020 to 31.03.2022.
As per the RBI regulations on capital charge for credit risk of individual housing loans by banks, differential risk weights were applicable based on the size of the loan as well as the loan to value ratio (LTV).
In terms of the Statement on Developmental and Regulatory Policies dated 9th October 2020, the RBI, recognising the criticality of real estate sector in the economic recovery, given its role in employment generation and the interlinkages with other industries, decided, rationalization of risk weights on Individual Housing Loans by linking them only with LTV ratios for all new housing loans sanctioned up to March 31, 2022.
It was stated that such loans shall attract a risk weight of 35 per cent where LTV is less than or equal to 80 per cent, and a risk weight of 50 per cent where LTV is more than 80 per cent but less than or equal to 90 percent.
Currently, the capital charge for claims secured by residential property falling under the category of individual housing loans is assigned differential risk weights based on the size of the loan as well as the loan to value ratio (LTV).
As a countercyclical measure, RBI has issued a notification to rationalise the risk weights, irrespective of the amount.
Now, the risk weights for all new housing loans to be sanctioned on or after the date of this circular and upto March 31, 2022 shall be as under:
| LTV Ratio (%) | Risk Weight (%) |
| ≤ 80 | 35 |
| > 80 and ≤ 90 | 50 |
4. The requirement of standard asset provision of 0.25% shall continue to apply on all such loans.
5. The LTV ratios, Risk Weights and Standard Asset Provision for all loans sanctioned prior to the date of this circular shall continue to be as prescribed in terms of the circular dated June 7, 2017.
Penalty u/s 271B is not attracted in a case where books of account have not been maintained In a recent…
NALCO invites RFP for empanelment of Chartered Accountant Firms for verification of Stores/Spares and movable assets. NALCO has invited Request…
Sending or bringing currency of Nepal and Bhutan - RBI revises exiting regulations RBI has notified the Foreign Exchange Management…
Entire manufacturing process though by distinct units relevant for exemption from excise duty on account of manufacture without aid of…
High Court condoned delay in filing Form 10B as the failure was in the 1st Year of operation of the…
Penalty u/s 270A quashed as there was no satisfaction in the penalty order on what exactly was under reporting of…