What changed
This master circular updates and consolidates all housing finance instructions for UCBs issued up to June 30, 2012, replacing the previous July 1, 2011 circular. It reiterates that UCBs can lend to individuals, housing societies, and boards for various schemes, with loan terms based on commercial judgment.
What it means for you
UCBs can continue housing lending from own resources, with priority sector benefits for specified categories. Banks with surplus funds are encouraged to expand housing credit, as it offers a profitable investment avenue. The circular emphasizes flexibility in loan amounts and margins, subject to board approval.
What you must do
- Review and update internal housing loan policies to align with the consolidated guidelines.
- Ensure board approval for loan amounts and margins as per commercial judgment.
- Classify eligible housing loans under priority sector up to prescribed limits.
- Consider obtaining general permission from Registrar for financing housing societies, if required.
Who it affects
Primary (Urban) Co-operative Banks (UCBs), Housing finance departments of UCBs, Borrowers seeking housing loans from UCBs
What categories of borrowers are eligible for housing loans under this circular?
Eligible borrowers include individuals, cooperative/group housing societies, housing boards for EWS/LIG/MIG projects, and owners for home extensions or major repairs.
Are housing loans from UCBs considered priority sector lending?
Yes, housing finance to specified categories up to prescribed limits qualifies as priority sector lending, aligning with social objectives.
Do UCBs need special permission for each housing society loan?
No, the circular suggests UCBs obtain general permission from the Registrar to finance housing societies, subject to prescribed terms.