RBI reduces risk weight on housing loans

MUMBAI: Reserve Bank of India (RBI) on Thursday notified the reduction in risk weight on hosing loans for up to Rs 20 lakh from 75 per cent to 50 per cent.

"It has been decided to reduce the risk weight in respect of housing loans of up to Rs 20 lakh to individuals against the mortgage of residential housing properties from 75 per cent to 50 per cent," RBI said in a notification issued here today.

The notification follows RBI's decision to this effect in its credit policy last month.

The central bank also reduced the risk weight for banks' investment in mortgage backed securities, issued by the housing finance companies, to 50 per cent from the existing 75 per cent.

RBI, however, said it would review the risk weights after one year keeping in view the default experience and other relevant factors.