Mumbai, Oct 9 (IANS): In a bid to improve liquidity for home buyers and boost realty demand, the Reserve Bank of India (RBI) has decided to rationalise the risk weights of new individual home loans sanctioned up to March 31, 2022.

Under the extant regulations, differential risk weights are applicable to individual housing loans, based on the size of the loan as well as the loan-to-value ratio (LTV).

Addressing the media after the Monetary Policy Committee's bi-monthly meeting, RBI Governor Shaktikanta Das said: "In recognition of the role of the real estate sector in generating employment and economic activity, it has been decided to rationalise the risk weights and link them to LTV ratios only for all new housing loans sanctioned up to March 31, 2022."

He noted that the move is expected to give a fillip to the real estate sector.

Realty players have hailed the decision which would boost liquidity for the prospective home buyers.

"The linking of risk weight of home loans to LTV for all new housing loans is a step in the right direction, this will benefit the real estate sector," Krish Raveshia, CEO, Azlo Realty said.