What changed
The housing finance exposure limit for State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs) has been reduced from 10% of total loans and advances to 5% of total assets. The total assets are to be calculated based on the audited balance sheet as of March 31 of the preceding financial year. This change is applicable with immediate effect from the date of the circular (January 20, 2011).
What it means for you
Co-operative banks must now cap their housing loan portfolio at a lower threshold, which could restrict lending growth in this segment. Banks with existing exposure above 5% of total assets need to reduce it within six months, potentially requiring adjustments in lending strategies or asset rebalancing.
What you must do
- Calculate your current housing finance exposure as a percentage of total assets using the latest audited balance sheet.
- If exposure exceeds 5%, prepare a plan to reduce it within six months from January 20, 2011.
- Review and update internal lending policies to align with the new limit.
- Acknowledge receipt of this circular to your respective RBI Regional Office.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (CCBs)
What is the new housing finance exposure limit for StCBs and CCBs?
The limit is now 5% of total assets, down from the earlier 10% of total loans and advances.
How is total assets defined for this limit?
Total assets should be based on the audited balance sheet as of March 31 of the preceding financial year.
What if my bank's current exposure exceeds the new limit?
You must take steps to bring it down within six months from the date of this circular.