Industry players are of the same view. Rajeev Talwar, Group Executive Director, DLF, said: “Property prices have risen due to a supply gap created as a result of land not being released. There is need for Government to raise the limit for priority sector lending from Rs 20 lakh if they want the credit offtake to go up. Also the limit on tax benefit should be raised from Rs 1.5 lakh. The basic idea should be to allow the economy to flourish and there should be no artificial barrier.”

As of now, home loans up to Rs 20 lakh fall under priority sector lending across the country. But in recent years, property prices have shot up across cities. Prices also vary widely from city to city. While properties under Rs 20-25 lakh are available in Tier II and Tier III cities, it’s difficult to find properties in this range in metros like Delhi and Mumbai.

An industry expert said “almost 60 lakh individuals have taken home loans and almost 50-60 per cent of these transactions fall within the Rs 20 lakh bracket. Most of these small ticket loans are in smaller towns while in metros and larger towns, this percentage falls to 15-20 per cent.” This is primarily because of the high property prices in larger towns. Clearly, the policy of keeping small-ticket home loan rate low is not benefiting borrowers, especially in the metros. Experts said it was time for RBI to go for a revision of limits and frame the policy in a way that meets requirements of home buyers across the country proportionately.

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