What changed
This master circular updates and consolidates all previous instructions on housing finance for UCBs up to June 30, 2007. It replaces the earlier master circular dated July 7, 2006. The content remains largely unchanged, but the consolidation ensures banks have a single reference document.
What it means for you
UCBs now have a unified set of guidelines for housing loans, covering borrower categories, loan amounts, margins, interest, and security. The circular reinforces the role of UCBs in priority sector lending, especially for weaker sections. Banks must align their housing finance policies with these updated instructions to ensure compliance and avoid regulatory issues.
What you must do
- Review and update your bank's housing loan policy to align with this master circular.
- Ensure all housing loans comply with the specified maximum loan amounts, margins, and interest rate guidelines.
- Classify eligible housing loans under priority sector as per the circular's definitions.
- Train loan officers on the updated borrower categories and eligible housing schemes.
- Maintain records of housing loan disbursements for regulatory reporting and inspection.
Who it affects
Primary (Urban) Co-operative Banks, Housing loan borrowers (individuals, societies, housing boards), Priority sector lending departments of UCBs, Regulatory compliance teams at UCBs
What are the eligible borrower categories for housing loans under this circular?
Eligible borrowers include individuals, cooperative/group housing societies, housing boards for EWS/LIG/MIG projects, and owners for extension/upgradation of houses/flats.
Does this circular change the priority sector classification for housing loans?
No, it reaffirms that housing loans to specified categories up to prescribed limits are treated as priority sector lending, consistent with earlier guidelines.
What should UCBs do if they need special permission from the Registrar for financing housing societies?
The circular suggests banks obtain general permission from the Registrar to finance housing societies, subject to prescribed terms and conditions, to streamline the process.