State Bank of India (SBI) will increase its loan limit by ten-fold to individuals who are proposing to buy land to construct a house .According to a senior official,the bank has finalised a proposal under which it will lend Rs 10 crore for buying land for housing against the earlier cap of Rs 1 crore. The bank has eased a rider pertaining to the construction period if the project is undertaken by government agencies. Currently, a project must be constructed within a couple of years.

The senior official also added, “A customer will also be eligible to avail another housing loan for other housing-related construction on that plot, enjoying the benefit of running both the loans concurrently,” . SBI  hast set the margin money limit ,the amount a customer has to pay upfront for availing a loan ,at nearly 35% for loans above Rs 1 crore. For loans up to Rs 75 lakh, SBI has fixed the margin money requirement at 20%. SBI’s latest move to push ahead in the housing sector follows its troubles with excess liquidity and a tepid credit offtake.

The official said “We have a liquidity of over Rs 40,000 crore; schemes such as this will help us achieve our credit growth targets,” . The bank plans to increase its credit growth target by around 22%. Last year, the central bank had revised the credit growth target for commercial banks, the money they lend to customers, to 16% from 18%. SBI has already turned its attention to the housing sector. The bank recently extended its popular 8% home loan scheme, or teaser loans, until June 30. It is also looking at other avenues to increase the credit offtake, though it will take steps to see that the due diligence process doesn’t suffer.

Also official added,“To minimise fraud risk, two title search reports from different lawyers will be obtained before sanctioning the loan,” . The sharp increase in the loan amount is also expected to boost the real estate sector, which, despite the return of buyers, continues to suffer from a big drop in banking credit. Loans to the realty sector fell 97% to Rs 842 crore for the 11 months to end February against Rs 33,617 from a year ago, say RBI figures.

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