Cheaper loans, full waiver of processing charges and concessions on margin money requirement may find place in a package that PSU banks will put together on Friday to invigorate demand in the housing sector."We discussed among ourselves what sort of relief can be given to the housing and the SME sectors. What could be the modalities for this," Indian Banks' Association Chairman T S Narayanasami told reporters in New Delhi.
"We are still working on this. I think some package will be formalised by tomorrow," he said.
The package would not be confined to interest rate only, he said, adding that there have to be other incentives apart from rate reduction.
The scheme would also include steps to give small and medium enterprises sector easier access to credit.
Incentives could be in the form of cut in margin requirement and processing fee, Narayanasami said.
When asked whether interest rates have been agreed upon, he said no decision has been taken on rates. The whole exercise is to make housing loan more affordable, he added.
He, however, ruled out any interest subsidy from the government for the package for home loans up to Rs 20 lakh.
The package for home loans below Rs 20 lakh was mentioned in the government's estimated Rs 35,000 crore fiscal stimulus package announced on Sunday.
The government had then said that public sector banks would soon announce a package for borrowers of home loans in the range of up to Rs 5 lakh and Rs 5 lakhs to Rs 20 lakh.
It had further said that additional measures would be taken as necessary to promote and accelerated growth trajectory in the housing sector.
"I don't think any subvention will be involved or will be necessary for banks," he said.
It is to be noted that Reserve Bank has also announced a refinance facility of Rs 4,000 crore to National Housing Bank to encourage more disbursal under housing loan up to Rs 20 lakh.
On the package for small and medium enterprises, the IBA chief said that "we are working on some relief package."
Already, RBI has announced a substantial relief package for the sector, Narayanasami said, adding that "from banks, whatever is to be done, we are looking into it."
It will also include some interest rate concession. Banks are yet to crystallise on that, he said.
On its part, Reserve Bank last week announced a refinance facility of Rs 7,000 crore for Small Industries Development Bank of India to facilitate the flow of credit to SMEs.
At the same time, the government also doubled the current guarantee cover for loans of up to Rs one crore from the existing limit of Rs 50 lakh to boost collateral free lending to Micro and Small enterprises.
Besides, the lock in period for loans covered under the existing credit guarantee scheme will be reduced from 24 to 18 months, to encourage banks to cover more loans under the guarantee scheme.