Banks Urge Government to Revise Affordable Housing Criteria

Banks including State Bank of India and HDFC Bank have urged the Indian government to revise the criteria for affordable housing, saying fixed property value and size limits have lost relevance due to inflation and rising construction costs. They recommend that thresholds be indexed to real estate price trends to reflect current market conditions.

SBI Chairman CS Setty said the bank's home loan portfolio has grown by 13.7%, with rising average ticket sizes, indicating a shift in housing demand. HDFC Bank Chairman Keki Mistry noted that the Rs 2 lakh deduction on home loan interest under Section 24(b) of the Income-Tax Act, set in 2014, now covers only a fraction of actual interest payments for many buyers.

Under Pradhan Mantri Awas Yojana (Urban), affordable housing is currently defined by income groups and property size, with caps of 60 sq m in metros and 90 sq m in non-metros, and a value limit of Rs 45 lakh. These have remained unchanged since 2017, according to the Confederation of Real Estate Developers’ Associations of India (Credai), which also called for revision in January 2026, citing inconsistencies across PMAY, RBI, NHB, and Rera definitions.

The government has not yet responded to the recommendations. Officials may consider a review ahead of upcoming housing policy assessments, with stakeholders expected to engage further in the coming months.