Govt asks PSU banks to protect interest of home loan borrowers
New Delhi, April 19: The government today asked public sector banks to hold interest rates on home loans of up to Rs 10 lakh, but be cautious about lending to commercial real estate sector and for buying stocks.
"Banks have been advised that while keeping their long term portfolio (in mind), they should protect the interests of home loan borrowers taking loans of Rs 8-10 lakh, to the extent possible," secretary (financial sector) Vinod Rai told reporters after Finance Minister P Chidambaram's meeting with PSU bankers.
He said following reserve bank's notice to banks for slowing down credit to sensitive sectors like commercial real estate, stock market and non-banking finance companies (Nbfcs), government has asked them to be cautious while lending to these sectors.
Asked whether the government's direction in February to public sector banks not to raise interest rate on home loans still stands, Rai said: "It is only a suggestion that we give... That means that previous advisory stands."
Earlier, presiding over the meeting, Chidambaram asked chief executives of state-owned banks to enhance lending to priority sector at the "correct price."
Considering that the average loans in priority sector is up to Rs 15 lakh, including home loans of Rs 8-10 lakh, Rai said the banks have been advised to raise deposits at low costs to offer such loans at the right price.
