Bangalore: Reserve Bank of India (RBI) has notified banks to exclude stamp duty charges, registration and other similar charges, which the banks used to include while calculating the total property value for a home loan. This proposal of RBI will lower the cravings for home loans especially among medium and lower segment people.

Earlier the total property value included all the duty charges and registration fees, which lend the loan seekers quite an appreciable amount but because of this new RBI rule, exclusion of the duties and registrations fees will lower the property value and hence will fetch a comparatively low loan amount. Home loan seekers will now have to pay 25-30 percent of the property value which was 20 percent till now, as rest 80 percent they used to get as a loan amount. This means that the ‘loan to value’ ratio will fall by 5-10 percent.

“So far, individuals used to put in 20 percent of own money. Now they will have to pay for stamp duty and registration from their own pockets. I think borrowers can do that without much issue as their loan amount also decreases,” says Om Ahuja, CEO of JLL, a property consultants firm, as quoted by Economic Times.

Experts say that this step was taken by RBI to cut down the excessive lending by banks. In December 2010 there was a similar action taken by RBI to bring down the lending amount to 80 percent in case of loan for property value above 20 lakh and 90 percent in case of loan for property value below 20 lakh.