Hit hard by the shortage of funds to the housing and realty sector, builders met Reserve Bank Governor D Subbarao to press for easy flow of credit to the key segment.

The builders, during their hour-long meeting in Mumbai, demanded the central bank use its office to prompt banks to reduce the margins on their home loans to make it attractive to small loanees.

"Banks are reluctant to extend loans to buyers and construction companies. Also the margins are higher. These concerns have been conveyed to the RBI in the meeting," Orbit Corporations Chairman and Managing Director Punit Agarwal said.

With the banks turning more risk averse in the face of the rising badloans in the system, many lenders have increased margins on home loans significantly, affecting the ability of small home borrowers to secure credit, he said.

During the meeting, the Governor assured the builders that the apex bank will look into the matter.

Leading realty player, Hiranandani Group's Chairman, Niranjan Hiranandani said the recently announced special housing package for loans up to Rs 20 lakh has contributed little to minimise the woes of builders as the scope of the scheme is limited in big cities like Mumbai.

"The package is definitely a welcome move. But there is a need for more measures to stimulate demand in big cities like Mumbai, where the real estate prices are comparatively high," Hiranandani said.