What changed
The housing loan limit eligible for priority sector classification was raised from Rs 20 lakh to Rs 25 lakh per family for purchase or construction of a dwelling unit. This change applies to loans sanctioned on or after April 1, 2011.
What it means for you
RRBs can now classify housing loans up to Rs 25 lakh as priority sector advances, expanding their lending scope. This may boost housing credit in rural areas and help banks meet priority sector targets more easily.
What you must do
- Update internal lending policies to reflect the new Rs 25 lakh limit for priority sector housing loans.
- Ensure all housing loans sanctioned from April 1, 2011 onwards are classified correctly under the revised limit.
- Communicate the change to branch managers and credit officers for consistent implementation.
- Acknowledge receipt of the circular to the respective RBI Regional Office.
Who it affects
Regional Rural Banks (RRBs), Individual borrowers seeking housing loans from RRBs, Priority sector lending compliance teams
Does this limit apply to all housing loans or only new ones?
The increased limit of Rs 25 lakh applies to housing loans sanctioned on or after April 1, 2011.
Are loans to bank employees still excluded?
Yes, loans granted by banks to their own employees remain excluded from priority sector classification, as per the earlier circular.