What changed
This master circular updates and consolidates all housing finance instructions for UCBs issued up to June 30, 2010, replacing the previous circular dated July 1, 2009. No new policy changes were introduced; it is a compilation of existing guidelines.
What it means for you
UCBs have flexibility to set loan amounts and margins based on board-approved policies. Housing loans to weaker sections up to prescribed limits qualify as priority sector lending, aligning with social objectives. Bigger banks with surplus funds can use housing finance as a profitable investment avenue.
What you must do
- Review and update your bank's housing loan policy to align with the consolidated guidelines.
- Ensure board approval for margin and loan amount decisions as per commercial judgement.
- Classify eligible housing loans to weaker sections under priority sector correctly.
- Obtain general permission from Registrar for financing housing societies if required.
Who it affects
Primary (Urban) Co-operative Banks (UCBs), Individual borrowers seeking housing loans, Co-operative/group housing societies, Housing boards for EWS, LIG, MIG projects
Can UCBs set their own margins for housing loans?
Yes, UCBs can decide margins based on commercial judgement and board approval, as per the circular.
Does housing finance to weaker sections count as priority sector?
Yes, housing loans to specified categories up to prescribed limits are treated as priority sector lending.
What types of housing schemes are eligible for finance?
Eligible schemes include construction/purchase of houses, repairs, slum clearance projects, and related infrastructure like shopping centres within housing projects.