Key Points
Prudential measures like risk weights and loan to value adjustments along with interest rate are more effective in repayments of loans and help in housing credit growth as well as controlling the asset quality of banks' home loan portfolio, a research paper supported by the Reserve Bank shows.. "Banks capital adequacy had a positive impact on housing credit growth..
While macro prudential policy alone did not seem to affect housing sector NPAs, tighter Macro prudential and monetary policies in conjunction could help to reduce the NPA ratio in the housing sector" said a research paper titled " Assessing the Impact of macro-prudential Policies on Housing Credit Dynamics: Evidence from India"..
The research paper written is jointly by Amar Nath Yadav, Vivek Kumar and Jyoti Kumari of the Reserve Bank of India's Department of Statistics and Information Management and the external contributor Alok Kumar Chakrawal , vice-chancellor of Guru Ghasidas Vishwavidyalaya, Chhattisgarh..
The paper uses bank-level quarterly data of 51 major banks covering an 18 year period from first quarter of 2002 to third quarter of 2020 It evaluates the effectiveness of macro prudential policy instruments in influencing housing credit growth and credit quality in India..
