What changed
The loan component ceiling per dwelling unit for indirect finance to the housing sector through NHB-approved non-governmental agencies has been raised from ₹5 lakh to ₹10 lakh. This revision follows the Union Finance Minister's Budget 2012-13 announcement and applies to loans sanctioned from the date of this circular.
What it means for you
Urban Co-operative Banks can now classify a larger loan amount (up to ₹10 lakh per unit) as priority sector lending when financing housing through NHB-approved agencies. This allows UCBs to increase their priority sector portfolio without changing their lending strategy, potentially improving compliance with priority sector targets.
What you must do
- Update internal lending policies to reflect the new ₹10 lakh per dwelling unit ceiling for indirect housing finance.
- Ensure all loans sanctioned from May 18, 2012, under this category are classified as priority sector only if they meet the revised limit.
- Communicate the change to relevant branches and credit teams handling housing finance through NHB-approved agencies.
- Review existing loan applications in the pipeline to apply the new limit where applicable.
Who it affects
Primary (Urban) Co-operative Banks, NHB-approved non-governmental housing agencies, Borrowers seeking indirect housing finance through UCBs
Does this circular apply to direct housing loans by UCBs?
No, this circular specifically addresses indirect finance to the housing sector through non-governmental agencies approved by NHB. Direct housing loans are covered under separate priority sector guidelines.
From when is the revised limit of ₹10 lakh applicable?
The revised limit is applicable to loans sanctioned from the date of this circular, i.e., May 18, 2012.
What was the previous limit for such loans?
The earlier ceiling was ₹5 lakh per dwelling unit, as per the guidelines issued in August 2007.