Home › Circulars › RBI/2020-21/56

RBI Rationalises Risk Weights on Individual Housing Loans

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2020-21/56 · issued 16 Oct 2020 · ~2 min read

Quick answerRBI has reduced risk weights on new individual housing loans sanctioned from October 16, 2020 to March 31, 2022, irrespective of loan amount. For LTV ≤80%, risk weight is 35%; for LTV >80% and ≤90%, it is 50%. This lowers capital requirements for banks.

What changed

Previously, risk weights on individual housing loans depended on both loan amount and LTV ratio. Now, for new loans sanctioned between October 16, 2020 and March 31, 2022, risk weights are based solely on LTV: 35% for LTV up to 80%, and 50% for LTV above 80% up to 90%. The standard asset provision of 0.25% remains unchanged.

What it means for you

Banks can now hold less capital against new housing loans, freeing up capital for more lending. This countercyclical measure aims to boost the housing sector by making loans cheaper and more accessible. However, existing loans continue under the old, stricter risk-weight framework.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Update internal risk-weight models for new housing loans sanctioned from October 16, 2020 to March 31, 2022 to reflect the new LTV-based slabs.
Ensure LTV ratios are accurately calculated and documented for each new loan to apply correct risk weights.
Continue applying 0.25% standard asset provision on all such loans as before.
Maintain separate tracking for loans sanctioned before and after the circular date to apply different risk-weight regimes.

Who it affects

All Scheduled Commercial Banks (including Small Finance Banks, excluding Local Area Banks and Regional Rural Banks)

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-18 08:58 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 03 Aug 2026, 04:00 IST

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

Does this circular apply to loans sanctioned before October 16, 2020?

No. Loans sanctioned before this date continue to follow the earlier risk-weight rules based on both loan amount and LTV as per the June 7, 2017 circular.

What is the risk weight for a new housing loan with LTV above 90%?

The circular only specifies risk weights for LTV up to 90%. Loans with LTV above 90% are not covered by this circular.

Is the standard asset provision of 0.25% still applicable?

Yes, the circular explicitly states that the 0.25% standard asset provision continues to apply on all such loans.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #338: DOR.No.BP.BC.24/08.12.015/2020-21 — "Individual Housing Loans - Rationalisation of Risk Weights" dated October 16, 2020”

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

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In terms of circular No. DBR.BP.BC.No.72/08.12.015/2016-17 dated June 7, 2017 , the capital charge for claims secured by residential property falling under the category of individual housing loans is assigned differential risk weights based on the size of the loan as well as the loan to value ratio (LTV). 3. As a countercyclical measure, it has been decided to rationalise the risk weights, irrespective of the amount. The risk weights for all new housing loans to be sanctioned on or after the date of this circular and upto March 31, 2022 shall be as under: LTV Ratio (%) Risk Weight (%) ≤ 80 35 > 80 and ≤ 90 50 4. The requirement of standard asset provision of 0.25% shall continue to apply on all such loans. 5. The LTV ratios, Risk Weights and Standard Asset Provision for all loans sanctioned prior to the date of this circular shall continue to be as prescribed in terms of the circular dated June 7, 2017 . 6. All other instructions applicable in terms of the circular dated June 7, 2017 remain unchanged Yours faithfully, (Prakash Baliarsingh) Chief General Manager 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links : Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn &copy; Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2020-21/56 · issued 16 Oct 2020. The plain-English explanation above is BankPulse’s own independent summary.

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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=11984&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.