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The Reserve Bank of India has enhanced the ceiling on loans extended by urban co-operative banks (UCBs) to individuals for carrying out repairs/additions/alterations to their dwelling units.
The new ceiling on such loans will be Rs 2 lakh (Rs 1 lakh earlier) in rural and semi-urban areas and Rs 5 lakh (Rs 2 lakh) in urban areas.
Loans granted under the enhanced limits will also be eligible for classification under priority sector, the RBI said in a notification.
The exposure limit of UCBs to housing and commercial real estate loans continues at 10 per cent of their total assets.
The 10 per cent of total assets ceiling can be exceeded by an additional 5 per cent of total assets for grant of housing loans to individuals up to Rs 25 lakh, which is covered under priority sector.
UCBs can grant loans, repayable within a maximum period of 20 years, to three categories of borrowers: individuals and co-operative/group housing societies; housing boards undertaking housing projects/schemes for economically weaker sections and low/ imiddle income groups; and owners of houses/flats for extension and upgradation, including major repairs.
Tier-I UCBs (having deposits below Rs 100 crore) are permitted to extend individual housing loans up to a maximum of Rs 30 lakh per beneficiary of a dwelling unit.
Tier II UCBs (other than Tier-I UCBs) can extend individual housing loans up to a maximum of Rs 70 lakh per beneficiary of a dwelling unit subject to current prudential exposure limits.
According to the RBI, UCBs, with their vast network, occupy a strategic position in the financial system and have an important role to play in providing credit to the housing sector.
There are about 1,600 UCBs in the country. As at March-end 2012, these banks collectively had deposits and loans aggregating Rs 2,38,500 crore and Rs 1,58,000 crore, respectively.
Given their urban focus, UCBs mainly cater to the credit needs of small enterprises (23.1 per cent of total loans as at March-end 2012) and the housing sector (11.6 per cent). Micro credit, an important component of the priority sector, accounts for 9 per cent of total loans extended by UCBs.
ramkumar.k@thehindu.co.in
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