Mortgage borrowers rejoice! RBI raises home loan limit by 100% | Personal finance news

New Delhi: The Reserve Bank of India (RBI) on Wednesday increased by 100% the amount of loan that cooperative banks can lend to an individual in view of soaring property prices. Guidelines governing maximum authorized loan limits for cooperative lenders were last revised over a decade ago.

Given the importance of cooperative banks in promoting inclusive growth, the Reserve Bank of India announced three measures for the cooperative banking sector:

1. The limits of individual home loans being expanded by Urban Cooperative Banks (UCB) and Rural Cooperative Banks (RCB – State Cooperative Banks and District Central Cooperative Banks) which were last fixed in 2011 and 2009 respectively and are revised to the increase of more than 100% given the increase in housing prices. This will facilitate a better flow of credit to the housing sector.

2. Consistent with the exemption enjoyed by Regular Commercial Banks (SCBs) and UCBs, it is now proposed to allow Rural Cooperative Banks (RCBs – State Cooperative Banks and District Central Cooperative Banks) to extend funding to “commercial real estate – residential housing”. ‘ (i.e. loans for residential housing projects), within the current aggregate housing finance limit of 5% of their total assets. This measure will further increase credit flows from cooperative banks to the housing sector.

3. It was also decided to allow UCBs to extend home banking services to their customers. This will enable UCB to meet the needs of its customers, especially the elderly and people with disabilities.

RBI Governor Shaktikanta Das, who made the announcement as well as the other measures of the bi-monthly policy review, added that a detailed circular on the matter will be issued separately.

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