Go for low EMI, long term: RBI to banks

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SummaryFor home loans, banks should charge lower EMIs and increase repayment period: RBI

for developing long-term retail mortgage market in India," the report added.

It further suggested that the housing loan regulator NHB may examine the feasibility of extending its refinancing scheme to banks offering long term fixed housing loan products to their customers other than low income households.

"Further, NHB may explore issuing long term housing bonds for channelising the long term resources into the housing sector," the draft said.

The report also noted that lack of liquidity in the Indian securitization market is one of the major factors responsible for lack of popularity for fixed rate loan products.

It also pointed out that substantial increase in EMIs over a period of time has an adverse impact on the repayment capacity of the borrowers which also results in loan

delinquencies.

"In view of this, the aspect of transparency in retail loan products needs significant improvement...," it said.

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