RBI TIGHTENS REALTY LENDING NORM

The Reserve Bank of India (RBI) norms for lending to the real estate sector are getting stricter. After blocking funding for purchase of land, the central bank has further tightened its measures for checking flow of funds from banks to the real estate sector. It has asked banks to ensure that credit disbursed is used only for “productive construction activity.” The risk weights of bank’s exposure to commercial real estate and home loans above Rs. 20 Lacs has been raised to 150 bps. The banks need to monitor diversion of funds to speculative trading/investments.