RBI raises limit on individual housing loans from co-operative banks

The Reserve Bank of India (RBI) has raised by more than 100% the limits for individual housing loans issued by Urban Co-operative Banks (UCB) and Rural Co-operative Banks (RCB – State Co-operative Banks/StCB and District Central Cooperative Banks/DCCB). , given the rise in house prices.

As a result, UCB Tier I/Tier II limits have been revised from ₹30 lakh/₹70 lakh to ₹60 lakh/₹140 lakh, respectively.

Regarding RCBs, the limits have been increased from ₹20 lakh to ₹50 lakh for RCBs with an assessed net worth of less than ₹100 crore; and from ₹30 lakh to ₹75 lakh for other RCBs.

Individual home loan limits for UCBs and RCBs were last set in 2011 and 2009, respectively.

RBI Governor Shakitkanta Das said the revised limits will facilitate better flow of credit to the housing sector.

Commercial real estate financing

Further, in line with the exemption enjoyed by Scheduled Commercial Banks (SCBs) and UCBs, the RBI has permitted BCRs to extend financing to “Commercial Property – Residential Housing/HR” (i.e. loans for residential housing projects), within the overall housing finance limit of 5 percent of their total assets.

To this end, the CRE-RH will consist of loans to builders/developers for residential housing projects (excluding captive consumption). Such projects would normally not include non-residential commercial real estate.

However, integrated housing projects including commercial spaces (e.g. commercial complex, school) can also be classified under CRE-RH, provided that the commercial area in the residential housing project does not exceed 10% of the area. total floor space index (FSI). of the project.

A standard asset provision of 0.75% and a risk weighting of 75% are maintained for CRE-RH advances.

This measure will further increase credit flows from cooperative banks to the housing sector, Das said.

The central bank has also decided to allow financially sound and well-managed UCBs (FSWMs) to provide home banking services (through their own employees and agents) to their customers on a voluntary basis.

However, non-FSWM UCBs will need to obtain prior approval from the relevant regional office of the Reserve Bank Supervision Department to provide home banking services.

This will enable UCB to meet the needs of its customers, especially the elderly and people with disabilities.

Published on

June 08, 2022

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