CATALYST-ROLE OF GOVERNMENT

abhishreshthaa

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o Inclusion of housing loans within the priority sector. Direct finance up to Rs.10 -lakhs in case of rural and semi-urban areas now form part of the priority sector advances. This promoted banks to go for housing loans in a big way as it helped them to attain their targets of priority sector lending.


o Reduction in risk weight age bank's extending loans for acquisition of residential house properties to 50 per cent from 100 per cent. Reduction in Capital Adequacy Ratio requirement has effectively doubled the credit disbursement capacity of banks.


o Banks have elongated repayment periods of retail loans years to 50/20 years besides quoting fixed/ variable rate of interests based on their asset liability management structure and study of behavioral pattern of demand and time deposits.


o Deregulation of interest rate with option to quote fixed/ variable interest rate.


o Continuous reduction in bank rate, which resulted in reduction in lending rates as well.


o South ward movement in CRR and SLR ratios increasing lending capacity of banks.
 
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