The Reserve Bank of India (RBI) has upped the limits for individual housing loans being extended by Urban Cooperative Banks (UCBs) and Rural Cooperative Banks (RCBs - State Cooperative Banks/StCBs and District Central Cooperative Banks/DCCBs) by over 100 per cent, taking into account increase in house prices.
Accordingly, the limits for Tier I /Tier II UCBs have been revised from ₹30 lakh/ ₹70 lakh to ₹60 lakh/ ₹140 lakh, respectively.
As regards RCBs, the limits have been increased from ₹20 lakh to ₹50 lakh for RCBs with assessed net worth less than ₹100 crore; and from ₹30 lakh to ₹75 lakh for other RCBs.
The limits for individual housing loans for UCBs and RCBs were last fixed 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 dispensation available to Scheduled Commercial Banks (SCBs) and UCBs, the RBI has permitted RCBs to extend finance to ‘commercial real estate – residential housing/RH’ (that is loans for residential housing projects), within the existing aggregate housing finance limit of 5 per cent of their total assets.
For this purpose, CRE-RH shall consist of loans to builders/developers for residential housing projects (except for captive consumption). Such projects should ordinarily not include non-residential commercial real estate.
However, integrated housing projects comprising some commercial space (for example shopping complex, school) can also be classified under CRE-RH, provided the commercial area in the residential housing project does not exceed 10 per cent of the total Floor Space Index (FSI) of the project.
Standard asset provision of 0.75 per cent and risk weight of 75 per cent shall be maintained for CRE-RH advances.
This measure will further augment credit flows from the cooperative banks to the housing sector, said Das.
The central bank has also decided to permit financially sound and well managed (FSWM) UCBs to provide Doorstep Banking Services (through own employees and agents) to their customers on a voluntary basis..
However, Non-FSWM UCBs would have to seek prior approval of concerned Regional Office of Department of Supervision of the Reserve Bank to provide Doorstep Banking Services.
This will enable UCBs to meet the needs of their customers, especially senior citizens and differently abled.