What changed
Previously, under the circular dated June 8, 2022, housing loan limits were ₹60 lakh for Tier-I UCBs and ₹140 lakh for Tier-II UCBs. Now, with the four-tier regulatory framework (circular dated December 1, 2022), the same limits apply: ₹60 lakh for Tier-1 and ₹140 lakh for UCBs in Tiers 2, 3, and 4. The circular is effective from December 30, 2022.
What it means for you
UCBs in Tiers 2-4 now have a uniform higher ceiling of ₹140 lakh, simplifying compliance for larger banks. Tier-1 UCBs remain at ₹60 lakh, which may constrain lending in high-cost markets. Existing loans that breach the new limits are grandfathered, so no immediate restructuring is needed for legacy portfolios.
What you must do
- Update internal lending policies to reflect the new tier-wise housing loan limits.
- Review existing housing loan portfolios to identify any loans exceeding the revised ceilings.
- Ensure that new sanctions comply with the ₹60 lakh (Tier-1) or ₹140 lakh (Tiers 2-4) caps.
- Communicate the revised limits to credit and risk management teams for operational alignment.
Who it affects
All Primary (Urban) Co-operative Banks, Tier-1 UCBs, Tier-2, Tier-3, and Tier-4 UCBs, Borrowers seeking individual housing loans from UCBs
What are the new housing loan limits for UCBs under the four-tier framework?
For Tier-1 UCBs, the ceiling is ₹60 lakh per individual borrower. For UCBs classified under Tiers 2, 3, and 4, the limit is ₹140 lakh per individual borrower.
What happens to existing housing loans that exceed the new limits?
Existing loans sanctioned before December 30, 2022 that breach the revised ceiling are allowed to continue until maturity without any modification.
When do these revised limits take effect?
The limits are effective from the date of the circular, i.e., December 30, 2022.