What changed
This master circular updates and consolidates all housing finance instructions for UCBs up to June 30, 2009, replacing the July 1, 2008 version. No new policy changes were introduced; it serves as a single reference document.
What it means for you
UCBs can continue housing lending as per existing norms, with flexibility to set loan amounts and margins based on board-approved policies. Bigger banks with surplus funds are encouraged to expand housing finance, which also counts toward priority sector targets for weaker sections.
What you must do
- Review and update your housing loan policy to align with this master circular's consolidated guidelines.
- Ensure board approval for loan amount and margin decisions, as per commercial judgement.
- Classify housing loans to eligible weaker sections as priority sector advances up to prescribed limits.
- Obtain general permission from the Registrar for financing housing societies, if not already done.
Who it affects
Primary (Urban) Co-operative Banks (UCBs), Borrowers: individuals, cooperative/group housing societies, housing boards, Weaker sections: economically weaker sections, low and middle income groups
Can UCBs set their own loan amounts and margins?
Yes, based on commercial judgement and board approval, as per section 4.1 of the circular.
Does housing finance qualify as priority sector lending?
Yes, for specified categories up to prescribed limits, as noted in section 8 of the circular.
Are housing loans for repairs covered?
Yes, loans for repairs, alterations, and additions to houses/flats are eligible under section 3(ii).