Sinha announced that 3 per cent of incremental bank deposits must be directed towards the housing sector. Up to February 12, incremental deposit growth in the current fiscal was to the tune of Rs 86,308 crore.

The overall minimum target for 1997-98 as well as for 1998-99 for housing finance allocation by scheduled commercial banks was fixed at 1.5 per cent of the industry's incremental deposits of the previous year or the amount of housing finance allocation fixed for the previous year- whichever was higher. State Bank of India chairman GG Vaidya said the bank's target for the housing finance is already pegged over three per cent during 1998-99.

"At 3 per cent of the incremental deposits, we need to deploy about Rs 700 crore worth of funds in thehousing sector. Against this, we have already targeted Rs 1000 crore worth of housing loans disbursement this year itself," Vaidya said.

Going by the new ceiling of three per cent, as announced by the finance minister, the aggregate exposure of the banks for domestic housing finance sector will exceed Rs 4,000 crore during 1999-2000, said sources from the banking industry. "The overall package of incentives for the domestic housing sector announced by Sinha will create vast opportunity for the consumption of large bank finances," said senior bankers.

``It is a safe investment and the bank will opt for a subsidiary during current fiscal,'' said Bank of India chief S Rajagopal. BoI has two dedicated branches for housing finance and its Mumbai-based branch has zero NPA, he said. According to him, BoI is expected to have an incremental deposit of Rs 4000 crore during 1998-99.