SBI Seeks Revision of Affordable Home Eligibility Criteria Amid Rising Loan Sizes

SBI Seeks Review of Affordable Home Definition Amid Rising Housing Costs

The State Bank of India (SBI), the country's largest lender, has requested a review of the definition of affordable homes, citing a significant increase in its average home loan size in recent years. According to Chairman C S Setty, the bank's average loan size has risen to Rs 51 lakh, up from around Rs 35-40 lakh two years ago.

This increase is attributed to the rising costs of housing in the country, which has necessitated a reevaluation of what constitutes an affordable home. Currently, a home qualifies as affordable housing if its cost is up to Rs 45 lakh and the carpet area meets a particular size. Policy incentives for lenders financing affordable house purchases include priority sector lending and tax sops.

SBI's housing finance portfolio saw a 13% jump in FY26, but Chairman Setty has expressed concerns that a continued growth in this vertical is unlikely to positively impact the bank's net interest margins (NIMs).

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The bank's request for a review of the affordable home definition is aimed at addressing the changing landscape of housing costs in the country. With SBI holding the highest market share in the competitive affordable housing segment, the bank's concerns carry significant weight.