RBI hikes housing loan limits for co-operative banks
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2009-10/120 · issued 13 Aug 2009 · ~2 min read
Quick answerRBI raised the maximum housing loan per borrower from Rs 5 lakh to Rs 20 lakh for most StCBs/DCCBs, and to Rs 30 lakh for those with net worth of Rs 100 crore or more. The aggregate housing loan cap was also revised to 10% of total loans and advances.
What changed
The per-borrower housing loan limit was increased from Rs 5 lakh to Rs 20 lakh, with a higher limit of Rs 30 lakh for banks having net worth of Rs 100 crore or more as per NABARD's latest inspection. The aggregate housing loan outstanding cap was revised from 5% of total deposits to 10% of total loans and advances as of March 31 of the preceding year, with an allowance to exceed this limit using funds from higher financing agencies or NHB refinance. The loan limit for repairs, additions, or alterations to existing houses was raised from Rs 50,000 to Rs 1 lakh.
What it means for you
Co-operative banks can now offer significantly larger housing loans, enabling them to better serve individual borrowers and compete in the housing finance market. The revised aggregate cap based on loans and advances (instead of deposits) provides a more growth-oriented framework, though banks must ensure they do not finance commercial real estate, which remains prohibited. Banks with stronger net worth get an additional advantage with a higher per-borrower limit.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update internal housing loan policies to reflect the new per-borrower limits of Rs 20 lakh (or Rs 30 lakh for eligible banks).
Recalibrate aggregate housing loan exposure to ensure it does not exceed 10% of total loans and advances as of March 31 of the previous year.
Review and adjust loan limits for repairs/additions to existing houses to the revised Rs 1 lakh per borrower.
Ensure strict compliance with the prohibition on financing commercial real estate under housing loan portfolios.
Acknowledge receipt of the circular as instructed.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (DCCBs), Individual borrowers seeking housing loans from co-operative banks, NABARD (as assessing authority for net worth)
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the new maximum housing loan limit for an individual borrower from a co-operative bank?
The limit is Rs 20 lakh for most StCBs/DCCBs. However, if the bank has a net worth of Rs 100 crore or more as per NABARD's latest inspection, the limit is Rs 30 lakh.
How is the aggregate housing loan cap calculated now?
The aggregate of all housing loans outstanding (to individuals, institutions, and societies) should not exceed 10% of the bank's total loans and advances as on March 31 of the preceding year. This cap can be exceeded if funds are obtained from a higher financing agency or refinance from NHB.
Does this circular allow co-operative banks to lend for commercial real estate?
No. The circular explicitly clarifies that housing loans do not include finance to the commercial real estate sector, which remains prohibited for StCBs and DCCBs as per earlier instructions.
📜 This document’s life story (2 recorded events, each backed by RBI’s own words)
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/120
RPCD CO.RCBD. BC. No.15 /03.03.01/2009-10
August 13, 2009
All State and Central Co-operative Banks
Dear Sir
Housing Finance
Please refer to our circular RPCD No. PLNFS. BC. 51/06.11.02/97-98 dated October 31, 1997 read with circulars RPCD No. PLNFS. BC. 04/06.11.02/97-98 dated July 5, 1997 and RPCD No. PLNFS. BC. 122/06.11.02/94-95 dated February 24, 1995 on the captioned subject. In terms of the extant instructions, the maximum quantum of housing loan that can be granted by a State/Central Co-operative Bank to an individual borrower stands at Rs. 5 lakh, subject to the condition that the aggregate housing loans outstanding on any day against individuals, institutions and societies should not exceed 5% of a bank's total deposits. For repairs, additions, alterations, etc. to the existing houses, the maximum amount of loan per individual borrower stands at Rs. 50,000.
2. On a review, it has been decided as under:
(i) The maximum quantum of housing loan that can be granted to an individual borrower by a State / Central Cooperative Bank stands revised to Rs. 20 lakh. However, in case of a bank having a net worth of Rs. 100 crore and above [as per the assessment made in NABARD's latest inspection report], the limit will be Rs. 30 lakh.
(ii) The aggregate of housing loans outstanding on any day against individuals, institutions, and societies should not exceed 10 % of total loans and advances of the bank as on March 31 of the preceding year. However, this limit can be exceeded to the extent of funds obtained for the purpose from the higher financing agency and refinance from the National Housing Bank.
(iii) It is clarified that housing loans would not include finance to commercial real estate sector as it has already been advised vide our circular No. RPCD.CO.RF.BC.No.109/07.38.01/2008-09 dated May 25, 2009 that State and Central Cooperative banks should desist from financing the commercial real estate sector.
(iv) For repairs, additions, alterations etc., to the existing houses, the maximum amount of loan per individual borrower stands revised to Rs. 1 lakh.
3. Please acknowledge receipt.
Yours faithfully
(R.C Sarangi)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/120 · issued 13 Aug 2009. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5213&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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