Mumbai, Oct 29: The modified norms for housing industry announced in the credit policy augurs in well for the industry that is reeling under unprecedented recession. For the first time the policy has allowed the NRIs to unlock the value of their fixed assets without forcing them to sell off the assets. RBI has also decided to increase the priority sector lending limits for housing finance from Rs 5 lakh to Rs 10 lakh.

“All investment in bonds issued by the National Housing Bank and Housing and Urban Development Coporation exclusively for financing of housing irrespective of the loan size per dwelling unit will be reckoned for inclusion under the priority sector advances,” the RBI credit policy added.

HDFC managing director Deepak Satwalekar told The Financial Express that the RBI directive including bank investment in NHB and Hudco bonds under priority sector advances and allowing banks to freely price such loans will significantly enhance the flow of funds for this sector and will also reduce the cost of such funds for good quality borrowers.

“RBI is continuing to give emphaisis to housing industry in consonance with announcements made in the budget. It will enthuse the housing finance companies and banks to lend more aggresively to the sector. NRIs utilise fixed assets for more credit,” the managing director of Hiranandani constructions and director of Hudco, Niranjan Hiranandani told The Financial Express.

At present, banks are required to allocate 3 per cent of their incremental deposits to housing. According to the modified guidelines all indirect housing loans extended by the banks to these agenices against loans sanctioned by them will also be recokned as part of housing finance allocation. “Allowing NRIs to mortgage their property may not lead to a spurt in borrowings as funds are often not a problem for them. NRI groups who have parked substantial investments in high value projects in cities like Mumbai may want to mortgage the property while waiting for prices to pick up. Enhancing the priority sector lendings will certainly encourage investors to borrows and larger influx of credit is expected into the industry,” the manager of Richard Ellis’ corporate real estate services, Sanjay Dutt said.