Redefining standards for affordable housing, banks tell government; “Higher ticket sizes, interest costs need to be taken into account” –

MUMBAI: Banks have asked the government to review the definition of affordable housing by reviewing the property value and size thresholds to reflect inflation and changing requirements, as rising ticket sizes and interest costs make the existing limits less relevant.“We are the market leader in housing finance and our home loan portfolio has grown by 13.7%. Our average ticket size has also gone up. The composition of affordable housing needs to change. This is what we have been telling the government,” said CS Sethi, Chairman, State Bank of India.“Over time, fixed thresholds lose their importance. Today, it may not be possible to buy a home within price thresholds that qualified as affordable 10 years ago.

“Ideally, these limits should be indexed to property prices,” said Kiki Mistry, Chairman, HDFC Bank. Likewise, Section 24(b) of the Income Tax Act provides for a deduction of Rs 2 lakh on interest paid on home loans. When this limit was set in 2014, it was large; today it covers only a small portion of the average interest issued, he added.

Currently, the government follows multiple definitions of affordable housing.

Under the Pradhan Mantri Awas Yojana (urban), affordability is linked to income brackets and house size. The economically weaker sections include families with an income of up to Rs 3 lakh per annum and a house size of about 30 square metres. The low-income groups cover income between Rs 3 lakh and Rs 6 lakh with a house area of ​​about 60 square metres. Middle income groups I and II have income between Rs 6 lakh and Rs 18 lakh with larger size limits of around 160 sq m for higher categories.In January 2026, the Confederation of Real Estate Developers Associations of India (Credai) called for an update on affordable housing standards. “The current definition, which has not changed since 2017, restricts units to 60 sq m in metros and 90 sq m in non-metros, coupled with a maximum value of Rs 45 lakh, which is no longer in keeping with rising land and construction costs,” the association said. The industry body said multiple tariffs across schemes like PMAY, RBI, NHB and Rera create complexity.