Govt recognises public demand for lower home loan rates
The government on Thursday acknowledged that there is public demand that interest rates on home loans up to Rs 20 lakh should be slashed, but said it is for the banks and RBI to take a call.
"I shall certainly bear in mind that there is public demand that interest rates for borrowers, who borrow (housing loans) up to Rs 20 lakh, must be lowered," finance minister said during his post-Budget interaction with industry chamber Assocham.
The finance minister said he agreed that housing loan borrowers of less than Rs 20 lakh should be incentivised by lowering interest rates.
"I made a number of efforts to impress upon bankers in this regard ... It is a constant effort that I will have to make... Bankers will have to take a call, RBI will have to take a call."
As much as 80 per cent of all housing loans fall in the category of below Rs 20 lakh, he said, adding that these loans have less risk weight than those above Rs 20 lakhs and, therefore, bankers have incentives to lend to these borrowers at lower interest rates.
The RBI governor's position to strike a balance between low inflation and high growth is unenviable, he said. "He (RBI governor) can never please everyone. It is his judgement call what should be the interest rates in order to contain inflation and promote growth, the finance minister said."
Chidambaram said he recognised that from the government's point of view it is important to promote growth without stoking inflation.