Home loans for EWS may get priority lending tag

The Reserve Bank today said it is considering categorising housing finance for economically weaker sections (EWS) as priority sector lending by early next month to ensure adequate flow of credit.

"We are trying to put housing finance for weaker section as a part of priority sector. There is a committee which is looking into it. Hopefully, by the first week of February this report will come," RBI Deputy Governor H R Khan said.

The committee is headed by Union Bank of India chairman and managing director M V Nair, was constituted by the RBI to look into various issues related to priority sector lending, including review of loan limits under the segment. The committee has sought to address issues like desirability of simplifying the approach to direct lending, inconsistencies or ambiguities in the existing guidelines, nature of activities presently classified as priority sector that need relook and new areas which should be incorporated.

The terms of reference of the Nair committee is to revisit the eligibility criteria for classification of bank loans as priority sector with reference to nature of activities and types of borrowers (individuals versus institutions, corporate and partnership firms) of loans.

It will review nature of activities and types of borrowers of loans which can be brought under priority segment.

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