In 2013-14, housing loans under priority sector grew by 13%, contributing 16.5% to the total priority sector disbursement
Despite the thrust of the government on affordable housing and RBI’s expansion of whivh home loans can be a part of priority sector, banks have not pushed small home loans.
Strangely, the growth in priority sector housing loans by banks and their share in the overall priority sector lending have fallen in the three years following the launch of the government’s affordable housing scheme.
The chart above shows that in fiscal year 2014 (FY14), housing loans under priority sector grew by 13%, contributing 16.5% to the total priority sector disbursement. This growth has now dropped sharply to a mere 2% in FY18 and forms 14% of the total priority sector lending.
It would seem that the government’s push towards housing and the offer of big interest rate subsidies under the credit-linked scheme have hardly made a ripple in bank lending to the sector.
Therefore, even the latest tweaks in the definition of affordable housing for subsidy to the middle-income group and the Reserve Bank of India’s (RBI’s) hike in the housing loan amount eligible for priority sector are unlikely to make a big difference to banks
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