The Reserve Bank of India (RBI) has asked all commercial banks to refrain from overvaluing houses while providing loans.In a notification issued from Mumbai today, RBI has noticed that some banks include stamp duty, registration and other documentation charges in the cost of the house property, thereby overstating the realisable value of the property. The notification adds that by following such practice the banks are consequently diluting their stipulating margins.Accordingly, RBI has asked banks not to include these charges in the cost of the housing property they finance so that the effectiveness of Loan to Value norms is not diluted.Concerned over excessive flow of banking funds to the real estate sector, RBI had in 2010 issued guidelines directing the lenders to provide loans only up to 80 per cent of the cost of property. However, in case of small value housing loans of up to Rs 20 lakh, banks can provide loans up to 90 per cent of the property value.