Home › Circulars › RBI/2011-12/524

Priority Sector Lending: Housing Loan Limit Doubled to Rs 10 Lakh

Current · Source: Reserve Bank of India · RBI/2011-12/524 · issued 25 Apr 2012 · ~1 min read

Quick answerRBI raised the per-loan limit for bank credit to NHB-approved non-governmental agencies for housing from Rs 5 lakh to Rs 10 lakh, effective April 25, 2012. This expands priority sector lending scope for indirect housing finance.

The rule, in the simplest words

Banks can lend up to Rs 10 lakh to NHB-approved agencies for housing projects.
This limit applies to loans sanctioned from April 25, 2012, onward.
The increased limit is for on-lending to construction, slum clearance, or rehabilitation of individual dwelling units.

How it plays out — a real example

An agri & priority-sector lending officer in Indore, working with a bank, can now lend up to Rs 10 lakh to an NHB-approved agency for a housing project, helping to boost affordable housing credit in the region. This change allows the bank to support government housing goals while meeting its priority sector lending targets. The officer will need to update the bank's internal policies and communicate the revised limit to the credit and operations teams handling housing finance.

What changed

The per-loan ceiling for bank loans extended to non-governmental agencies approved by NHB for on-lending to housing construction, slum clearance, or rehabilitation was increased from Rs 5 lakh to Rs 10 lakh. This change was prompted by the Union Budget 2012-13 announcement and applies to loans sanctioned from the circular date.

What it means for you

Banks can now lend larger amounts to NHB-approved intermediaries for housing projects under priority sector, potentially boosting affordable housing credit. This may increase eligible priority sector lending volumes for banks, helping meet targets while supporting government housing goals.

What you must do

Update internal priority sector lending policies to reflect the new Rs 10 lakh limit for NHB-approved agency loans.
Communicate the revised limit to credit and operations teams handling housing finance.
Ensure loan sanctions from April 25, 2012 onward adhere to the increased ceiling.
Review existing exposure to NHB-approved agencies for potential top-ups within the new limit.

Who it affects

All scheduled commercial banks (excluding RRBs), NHB-approved non-governmental housing agencies, Borrowers seeking housing loans through intermediary agencies

❓ Common questions

Regulatory timeline

Stated effective date effective April 25, 2012
Decoded by BankPulse 2026-06-18 20:43 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Does this circular change the priority sector lending classification for these loans?

No, the circular only revises the per-loan limit upward. The loans remain classified as indirect finance to housing sector under priority sector, as per the existing master circular.

Is the new limit applicable to loans sanctioned before April 25, 2012?

No, the revised limit applies only to bank loans sanctioned from the date of this circular, i.e., April 25, 2012.

Which agencies are eligible under this increased limit?

Only non-governmental agencies that are approved by the National Housing Bank (NHB) for refinance are eligible for loans under this facility.

📜 Read the original circular — full text as issued by RBI

RBI/2011-12/524 

 RPCD.CO.Plan.BC.73 /04.09.01/2011-12 

 April 25, 2012 

 The Chairman/Managing Director/ 

 Chief Executive Officer 

 [All Scheduled Commercial Banks (excluding Regional Rural Banks)] 

 Dear Sir/ Madam,

 Priority Sector Lending-Indirect Finance to Housing Sector 

 Please refer to paragraph 6.4 of our Master Circular RPCD.CO.Plan.BC.10/04.09.01/2011-12 dated July 1, 2011 on lending to priority sector.

 2. Pursuant to the announcement made by Union Finance Minister in the Union Budget for the year 2012-13, it has been decided to increase the limit from Rs.5 lakh to Rs.10 lakh for the bank loans extended to non-governmental agencies, approved by NHB for their refinance, for on-lending for the purpose of construction/reconstruction of individual dwelling units or for slum clearance and rehabilitation of slum dwellers.

 3. The revised limit is applicable to the bank loans sanctioned from the date of this circular.

 Yours faithfully,

 (C. D. Srinivasan)

 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/524 · issued 25 Apr 2012. The plain-English explanation above is BankPulse’s own independent summary.

🧰 Tools — save, print, templates & related

Most relevant forCompliance Team Product Manager (Digital & Lending)Credit Manager / Underwriting RM — Loans (Assets)Business Head / Vertical Head Internal Audit

🛠 Banker’s toolkit — checklists & reply templates →

Related circulars · Financial Inclusion & Priority Sector

Small Account Rules for Co-operative Banks – RBI Circular 2011 RRB CRR Hiked to 9% from Aug 30, 2008 CRR Hiked for RRBs by 50 bps in Two Stages RRBs: PMLA Compliance – CTR, STR, and KYC Software Mandate RRB CRR Hiked to 8.25% from May 24, 2008

Browse all departments →

Who does what — compliance checklist

⚙️ Operations

Communicate the revised limit to credit and operations teams handling housing finance.

💰 Credit

Ensure loan sanctions from April 25, 2012 onward adhere to the increased ceiling.

📜 Compliance

Update internal priority sector lending policies to reflect the new Rs 10 lakh limit for NHB-approved agency loans.
Review existing exposure to NHB-approved agencies for potential top-ups within the new limit.

Grouped from the action items above — a single circular may involve more than one team.

Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All scheduled commercial banks (excluding RRBs), NHB-approved non-governmental housing agencies, Borrowers seeking housing loans through intermediary agencies), your first concrete step on “Priority Sector Lending: Housing Loan Limit Doubled to Rs 10 Lakh” is: “Update internal priority sector lending policies to reflect the new Rs 10 lakh limit for NHB-approved agency loans.” (RBI issued this 25 Apr 2012).

Circular: RBI/2011-12/524 -- Priority Sector Lending: Housing Loan Limit Doubled to Rs 10 Lakh
Issued: 25 Apr 2012
Action required: Update internal priority sector lending policies to reflect the new Rs 10 lakh limit for NHB-approved agency loans.
Action required: Communicate the revised limit to credit and operations teams handling housing finance.
Action required: Ensure loan sanctions from April 25, 2012 onward adhere to the increased ceiling.
Action required: Review existing exposure to NHB-approved agencies for potential top-ups within the new limit.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________

Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

💬 Banker Discussion

Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.

Loading comments…

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=7163&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.