What changed
This master circular updates and consolidates all housing finance instructions for UCBs issued up to June 30, 2013, replacing the previous circular dated July 2, 2012. No new policy changes were introduced; it serves as a single reference document.
What it means for you
UCBs now have a clear, consolidated framework for housing finance, enabling them to lend more confidently to weaker sections and priority sectors. Banks with surplus funds can use housing loans as a profitable investment avenue. The circular reinforces the role of UCBs in meeting social objectives through priority sector lending.
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 judgment.
- Classify eligible housing loans up to prescribed limits under priority sector lending.
- Obtain general permission from the Registrar for financing housing societies, subject to prescribed terms and conditions, if not already done.
Who it affects
Primary (Urban) Co-operative Banks (UCBs), Borrowers: individuals, cooperative housing societies, housing boards, Priority sector lending teams at UCBs
Can UCBs lend to builders or contractors under this circular?
The circular includes a section titled 'Advances to Builders / Contractors' but does not specify terms; banks should refer to the full circular for details.