State Bank of India's (SBI's) Chairman Dinesh Khara on Wednesday, October 4, shed light on the potential impact of government's new urban housing loan subsidy scheme. Khara said that the new scheme can generate demand for 50-60 lakh additional home loans over the next few years and have positive influence on the housing and home loan market too.
While praising the implementation of the PMAY (Pradhan Mantri Awas Yojana) urban scheme, the SBI Chairman said that hiking house price cap to Rs 50 lakh will benefit many borrowers.
“So far the
PMAY urban scheme has been implemented very well. The only thing is that over a period of time the cost goes up which means that some people who would have otherwise been eligible but on account of increased cost were not eligible. In this particular effort, those who were ineligible will now be covered under the higher cap," Khara told CNBC-TV18.
The
interest subvention scheme for urban housing is reportedly in advanced stages of consideration, awaiting cabinet approval. Banks are gearing up to roll out this scheme in the coming months, likely preceding key state elections later in the year and the general elections scheduled for mid-2024.
The scheme, as outlined by Prime Minister Narendra Modi in his Independence Day speech, is set to offer an annual interest subsidy ranging from 3% to 6.5% on loan amounts up to Rs 9 lakh. Housing loans below Rs 50 lakh with a tenure of 20 years are expected to be eligible for this proposed initiative. The goal is to provide affordable housing options to families living in urban areas, particularly those residing in rented houses, slums, chawls, and unauthorised colonies.
SBI, India's largest public sector bank, plays a pivotal role in the home loan market, commanding a 30 percent share with a home loan book of Rs 6.7 lakh crore.
It's important to note that this isn't the first time the government has offered interest subsidies to lower-income borrowers in urban areas. A similar scheme was in operation from 2017 to 2022, resulting in 12.27 million homes being sanctioned under its provisions.
Meanwhile, Khara also commented on the the upcoming Monetary Policy Committee (MPC) meeting of the
Reserve Bank of India (RBI), which is scheduled to take place from October 4 to October 6, 2023, amidst the fluctuating inflation scenario during FY24. The results of the forthcoming monetary policy review are anticipated to be announced on October 6, 2023, and there is an expectation in the markets that interest rates will remain unchanged.
Khara expects a pause in rates by the RBI.
For more details, watch accompanying video
(Edited by : Anshul)
First Published: Oct 4, 2023 11:26 AM IST