What changed
The Monitoring Committee of the Delhi High Court clarified that its earlier directions on housing loans (from circular dated November 22, 2006) do not apply to farmhouses constructed by farmers on agricultural land outside Grampanchayat and Municipal Council limits. In such cases, local rules will apply instead of the court's directions.
What it means for you
Co-operative banks can now process housing loans for farmhouses on agricultural land based on local regulations, without needing to comply with the Delhi High Court's specific directions. This reduces compliance burden for lenders in rural areas and clarifies the scope of the earlier circular. Banks must ensure they are aware of and apply the relevant local rules for such properties.
What you must do
- Update internal housing loan policies to exempt farmhouses constructed by farmers on agricultural land outside Grampanchayat and Municipal Council limits from Delhi HC directions.
- Train loan officers to identify properties qualifying for this exemption and apply local rules instead.
- Place this circular before your bank's board for formal acknowledgment and record.
- Acknowledge receipt of this circular to your respective Regional Office.
Who it affects
State and Central Co-operative Banks, Rural lending operations of co-operative banks
Does this circular apply to all housing loans or only farmhouses?
It specifically exempts farmhouses constructed by farmers on agricultural land outside Grampanchayat and Municipal Council limits from the Delhi High Court's earlier directions. For all other housing loans, the earlier circular remains applicable.
What should banks do if a loan application involves a farmhouse on agricultural land?
Banks should verify whether the land is outside Grampanchayat and Municipal Council limits. If yes, they must apply local rules instead of the Delhi HC directions. If within those limits, the earlier circular's directions apply.
Is board approval required for this change?
Yes, the circular explicitly states that its contents should be placed before the bank's board.