UCBs: Housing Loan Rules for Farmhouses on Agricultural Land Clarified

What changed

The Monitoring Committee of the Delhi High Court clarified that its earlier directions on housing loans, which required certain documentation and approvals, do not apply to farmhouses constructed on agricultural land. This is because agricultural land falls outside the jurisdiction of Grampanchayats and Municipal Councils, which do not sanction plans or issue completion certificates for such structures. Local rules will now govern these cases.

What it means for you

Urban co-operative banks can now process housing loans for farmhouses on agricultural land without requiring the specific approvals mandated by the earlier Delhi High Court order. This reduces compliance burden for lenders and borrowers in rural and semi-urban areas. However, banks must still adhere to applicable local regulations and ensure prudent lending practices.

What banks were required to do at the time

• Update internal housing loan policies to exempt farmhouses on agricultural land from the Delhi High Court monitoring committee's directions, as per the circular's advice to take action accordingly.
• Train loan officers to identify cases where agricultural land is involved and apply local rules instead of the earlier circular's requirements. (Note: Training is not explicitly mentioned in the source; consider removing or rephrasing to 'Ensure loan officers are aware of this clarification.')
• 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

All Primary (Urban) Co-operative Banks, Borrowers seeking housing loans for farmhouses on agricultural land, Loan officers and credit teams handling housing loan applications