Lenders have approached the banking regulator, advocating for nearly doubling the housing loan amount eligible for priority sector lending.

If approved by the Reserve Bank of India (RBI), this proposal could give a significant boost to the housing sector. Currently, a housing loan of Rs3.5 million in a metropolitan city is considered priority sector lending under existing regulations. Banks are required to meet priority sector lending targets.

According to a senior bank executive, the RBI established these limits for bank loans to the housing sector in 2018. The executive added that these limits do not reflect the current real estate prices, which have risen since then. Bankers have suggested that the limit be raised to Rs7.5 million for metropolitan areas and Rs 4.5 million for non-metropolitan areas.

This potential revision could have a positive impact on the housing market, making it more accessible for homebuyers.