The Reserve Bank of India has decided to enhance the housing loan limits for Regional Rural Banks (RRBs) and Small Finance Banks (SFBs) for eligibility under priority sector lending, in a bid to give them a level-playing field with other Scheduled Commercial Banks.

Henceforth, housing loans given by RRBs and SFBs to individuals up to ₹35 lakh in metropolitan centres (with population of 10 lakh and above) and ₹25 lakh in other centres, provided the overall cost of the dwelling unit in the metropolitan centres and at other centres does not exceed ₹45 lakh and ₹30 lakh, respectively, will be eligible for classification under priority sector lending.

So far, loans given by RRBs to individuals up to ₹20 lakh for purchase/construction of a dwelling unit per family, provided the overall cost of the dwelling unit does not exceed ₹25 lakh, were eligible to be classified under priority sector lending.

Similarly, in the case of SFBs, loans up to ₹28 lakh to individuals in metropolitan centres (with population of 10 lakh and above) and ₹20 lakh in other centres, were eligible to be classified under priority sector lending, provided the cost of the dwelling unit does not exceed ₹35 lakh and ₹25 lakh, respectively.

In its notification, the RBI said the existing family income limit of ₹2 lakh per annum, prescribed in the master direction for RRBs and the compendium for SFBs, eligible for loans to housing projects exclusively for the purpose of construction of houses for Economically Weaker Sections (EWS) and Low-Income Groups (LIG), has been revised to ₹3 lakh per annum for EWS and ₹6 lakh per annum for LIG.

This is in alignment with the income criteria specified under the Pradhan Mantri Awas Yojana.

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