Date:21/10/2005 URL: http://www.thehindubusinessline.com/2005/10/21/stories/2005102102210800.htm

Back Commercial property loans: NHB may hikerisk weightage

Our Bureau

Kolkata , Oct. 20

THE National Housing Bank is exploring the possibility of increasing risk weightage for loans for commercial property to 125 per cent from 100 per cent now.

The proposal is based on the recent move of the Reserve Bank of India on this front. This, Mr P. K. Gupta, CMD, told newspersons, should serve as "guidance" for the NHB.

The proposal will follow the NHB's earlier decision to increase the risk weightage for individual home loans from 50 per cent to 75 per cent. The move, it is pointed out, is quite in line with the central bank's recent stance on housing loans.

It may be recalled that an NHB circular referred to an amendment in the Housing Finance Companies (NHB) Directions, 2001, which led to the weightage change on housing loans to individuals secured by mortgage of immovable property, which are classified as standard assets.

Earlier this year, NHB had talked about the measures taken for standardisation in the housing finance mechanism, especially the system of origination and documentation of loans. This was done (following the submission of a report by a working group comprising industry representatives) to bring some uniformity in the disbursing housing loans.

The idea was to create an environment in which originators can sustain "investment quality in their portfolio so that it becomes attractive for securitisation," NHB had pointed out.