Housing Loans by Banks - Stamp Duty not to be included in Loan Amount
AS per RBI guidelines the Loan to Value (LTV) ratio in respect of housing loans should not exceed 80 per cent. However, for small value housing loans i.e. for loans below Rs. 20 lakh (which are classified as priority sector advances) the LTV ratio should not exceed 90 per cent.
RBI has come to know that banks adopt different practices for deciding the value of the house property while sanctioning housing loans. Some banks include stamp duty, registration and other documentation charges in the cost of the house property. This overstates the realisable value of the property as stamp duty, registration and other documentation charges are not realisable and consequently the margin stipulated gets diluted.
So RBI has directed that banks should not include these charges in the cost of the housing property they finance so that the effectiveness of LTV norms is not diluted.