If the proposal is approved by the Reserve Bank, borrowers eligible for a loan of up to ₹75 lakh as against ₹60 lakh under the existing loan for a project costing ₹1 crore including stamp duty and registration charges of ₹20 lakh will be. This amount is determined by the loan to value (LTV) ratio. As per the current guidelines, the home loan LTV ratio is 75-90% of the value of the property. If the loan amount is more than ₹75 lakh, then the LTV ratio cannot exceed 75%. About a decade ago, the Reserve Bank directed banks not to include stamp duty or registration charges in the total value of the house. Its purpose was to maintain the effectiveness of loan-to-value rules.
circular of rbi
The RBI circular of February 2012 states that adding such charges shows the recoverable amount of the property inflated while stamp duty, registration and other documentation charges cannot be recovered. Due to this the fixed margin gets reduced. Another banker said, “It is for the RBI to take the final call. If he thinks it appropriate, he can also set a limit for it. For example, stamp duty and other administration charges should not exceed 10% of the project cost.