The affordable housing category in India should definitely get a major boost since the Reserve Bank of India (RBI) increasing the loan limits under PSL (priority sector lending). The Government has also decided to tap into surplus land available and owned by PSUs for building affordable housing units. The housing loan limits for being eligible under the PSL (priority sector lending) category has been increased to Rs. 35 lakh from Rs. 28 lakh for metropolitan zones.
This has been increased to Rs. 25 lakh from Rs. 20 lakh in other centres. Homebuyers have already obtained recognition as financial creditors and hence will have more say when it comes to insolvency issues of real estate developers who default on their promises. The total cost of the unit in metropolitan centres (population of 10 lakh and more) and other centres should not cross Rs. 45 lakh and Rs. 30 lakh respectively in this case.
This move by the RBI will go a long way towards making bank loans in the affordable housing segment even cheaper. Loans that are given under the PSL (priority sector lending) segment are usually cheaper as compared to regular bank loans. The President of India, Ram Nath Kovind, has already given his approval for the promulgation of the Insolvency and Bankruptcy Code (Amendment) Ordinance of 2018.
Apart from getting recognition as financial creditors, homebuyers will now be able to call upon Section 7 of the Indian Bankruptcy Code (IBC) against real estate developers who are playing truant. Financial creditors can file applications asking for insolvency resolution procedures. The Union Government has also emphasized on utilizing land parcels available with sick PSUs and other enterprises. These will be tapped for affordable housing projects as per the guidelines issued by the Ministry of Housing and Urban Affairs.