The RBI has reduced the risk weightage on banks’ loans against residential housing properties to 50 per cent from the present 100 per cent. This will effectively double the credit disbursements capacity of banks. Loans against the security of commercial real estate, however, would continue to attract 100 per cent risk weight as hitherto.
Banks’ investments in mortgage-backed securities (MBS) of residential assets by HFCs which are recognised and supervised by NHB would also be assigned a risk weight of 50 per cent for the purpose of capital adequacy. However, investment by banks in MBS of housing assets which include commercial properties would attract 100 per cent risk weight.
Explained HDFC’s managing director Keki M Mistry: “Banks can now subscribe to securities-papers issued by HFCs and fulfil their balance-sheet requirements. This move was somewhat expected as we are moving towards international standards”. Said PNB Housing Finance Ltd’s managing director R Nambirajan: “These moves will help all banks to focus on housing loans, since in other loans the risk weightage is 100 per cent. This will also boost the MBS market, which was rather in a slow pitch so far”.
Both are now expecting the National Housing Bank to follow suit and reduce risk weightage to 50 per cent for HFCs from the current 75 per cent.
However, the likes of Dewan Housing Finance Corporation’s managing director, Kapil Wadhawan opined that unless NHB steps in positively to develop the securitisation market, the fruits can not be realised”.
The RBI is also planning to constitute a working group to suggest modalities for widening the investor base, improving the quality of assets, creating liquidity for trading in such assets and other related issues.