National Housing Board is planning to request RBI to ask banks to prioritise lending to housing finance companies (HFCs).

Priority sector loans come at comparatively cheaper rates than others. Usually banks offer discount up to 100 bps on such loans.

Many times banks lend indirectly to HFCs so that they can in turn lend to individuals seeking home loans. Currently, loans upto Rs 5 lakh are classified under the status of priority lending. On this issue, NHB says that it would seek RBI to increase the ceiling to Rs 10 lakh.

"Banks should be incentivised to lend to HFCs," NHB executive director RV Verma said. He also said NHB has already raised this issue with RBI on an informal note. "We will now formally advocate to enhance the limit to at least Rs 10 lakh," he said.

"With the sharp rise in prices of land building construction materials, Rs 5 lakh limit for priority sector loans is not justified. RBI should review this aspect to boost the housing industry," said DHFL Vysya Housing Finance managing director R Nambirajan.

NHB is wholly owned by RBI. It works as the central organisation with the goal to promote and regulate housing finance companies in the country.