Housing finance sector urges govt to raise tax-free bonds to refinance home loans

Chennai:

The housing finance sector has urged the Union government to allow financial institutions (FIs) to raise funds through tax free bonds for refinancing home loans at a low rate of interest besides green signal for External Commercial Borrowings (ECBs) for Housing Finance Companies without prior approval of RBI.

Urging finance minister Pranab Mukherjee to consider the proposals of housing finance sector in the budget, Srinivas Acharya, managing director of Sundaram BNP Paribas Home Finance also sought increase in Tax Deductibility of Home Loan Interest from the current Rs. 1.50 lakh annually to Rs 3 lakh per year.

He also said government could consider increasing the limit for financing small homes to Rs 25 lakh and the cost of house to Rs 30 lakh (Currently Rs 15lakhs/Rs 25lakhs) for being eligible for 1 per cent interest-subsidy.