Putting to rest all apprehensions on doing away with tax exemptions in housing loans, Finance Minister Jaswant Singh told the Lok Sabha today that there is no move to change the incentive policy in housing tax.After the Kelkar Committee recommendations, there were apprehensions whether the tax sops to housing sector would continue. The minister’s statement in Parliament has put to rest such speculations.Replying to queries during Question Hour, Singh said all commercial banks are now required by RBI to provide a minimum of three per cent incremental deposit for housing finance. The housing sector has seen a significant growth of 25% over the past three years, and financial institutions have liberalised lending norms and reduced interest rates, he added.According to RBI guidelines, the interest on loans upto Rs 2 lakh should not exceed the prime lending rate (PLR) of the bank and beyond Rs 2 lakh, banks have been given operational flexibility in deciding their lending rate.According to information furnished by National Housing Bank (NHB), the total housing finance disbursed by commercial banks and housing finance companies has increased from Rs 19,723.38 crore in 1999-2000 to Rs 29,600.25 crore in 2001-2002 and it is estimated that in 2002-2003, the disbursement would touch Rs 37,000 crore, Singh said in the Lok Sabha.The shares of housing finance companies shot up after the finance minister’s statement. While HDFC increased by about 6% and scaled a 52-week high, LIC Housing Finance surged by 3.18%. The two stocks created a combined market capitalisation of over Rs 500 crore.
