Stamp Duty & Registration Cost would not be added to total value of the Property in cases of Bank Loan if Property value exceeds Rs.10 Lacs

RBI/2014–15/491 DBR.BP.BC.No.74/08.12.015/2014–15

March 5, 2015

A. Inclu­sion of stamp duty and oth­er charges in LTV ratio

Please refer to our cir­cu­lar DBOD.No.BP.BC.78/08.12.001/2011–12 dat­ed Feb­ru­ary 3, 2012 on ‘Hous­ing Loans by Com­mer­cial Banks — Loan to Val­ue (LTV) Ratio’ where­by banks were advised that they should not include stamp duty, reg­is­tra­tion and oth­er doc­u­men­ta­tion charges in the cost of hous­ing prop­er­ty so that the effec­tive­ness of LTV ratio is not diluted.

2. It has been brought to our notice that these amounts form around 15% of the cost of the house and place a bur­den on the bor­row­ers from eco­nom­i­cal­ly weak­er sec­tions (EWS) and low income groups (LIG). With a view to encour­age avail­abil­i­ty of afford­able hous­ing to such bor­row­ers, it has been decid­ed that in cas­es where the cost of the house/dwelling unit does not exceed Rs.10 lakh, banks may add stamp duty, reg­is­tra­tion and oth­er doc­u­men­ta­tion charges to the cost of the house/dwelling unit for the pur­pose of cal­cu­lat­ing LTV ratio.

B. Con­struc­tion linked dis­bur­sal of hous­ing loan

3. Please refer to our cir­cu­lar DBOD.BP.BC.No.51/08.12.015/2013–14 dat­ed Sep­tem­ber 3, 2013 on “Hous­ing Sec­tor: Inno­v­a­tive Hous­ing Loan Prod­ucts – Upfront dis­bur­sal of hous­ing loans”, in terms of which banks were advised that dis­bur­sal of hous­ing loans sanc­tioned to indi­vid­u­als should be close­ly linked to the stages of con­struc­tion of the hous­ing project/houses and upfront dis­bur­sal should not be made in cas­es of incom­plete/un­der-con­struc­tion/­green field hous­ing projects.

4. In con­text of the above stip­u­la­tion, some banks have rep­re­sent­ed that they are not able to extend home loans to the allot­tees in the project devel­oped by Gov­ern­ment Bodies/ Statu­to­ry Hous­ing Author­i­ties, as the pay­ment sched­ule pre­scribed by such author­i­ties are not linked to the stages of con­struc­tion. Such author­i­ties allot flats to the indi­vid­ual alot­tees with the fol­low­ing pay­ment modes:

• One time lump-sum pay­ment with­in 1 to 3 months after allotment.
• Time linked pay­ment plan not linked to the stages of construction.

5. On a review, banks are advised that in cas­es of projects spon­sored by Government/Statutory Author­i­ties, they may dis­burse the loans as per the pay­ment stages pre­scribed by such author­i­ties, even where pay­ments sought from house buy­ers are not linked to the stages of con­struc­tion, pro­vid­ed such author­i­ties have no past his­to­ry of non-com­ple­tion of projects.

Yours faith­ful­ly,

(Sudar­shan Sen)
Chief Gen­er­al Manager-in-Charge