What changed
This master circular consolidates all housing finance instructions issued up to March 31, 2022, replacing the previous master circular dated February 18, 2022. No substantive policy changes were made; it is a routine compilation of existing guidelines.
What it means for you
Banks can rely on this single document for all current housing finance regulations, reducing compliance ambiguity. The circular reaffirms that bank credit must support genuine housing needs, not speculative real estate activities. Lenders must continue to obtain sanctioned building plans and borrower affidavits to prevent unauthorized construction.
What you must do
- Replace the February 2022 master circular with this updated version for all housing finance operations.
- Ensure loan sanction processes include obtaining sanctioned building plans and borrower affidavits against unauthorized construction.
- Review internal housing loan policies to align with consolidated guidelines on loan quantum, interest rates, and disclosures.
- Continue classifying eligible housing loans under priority sector as per existing norms.
- Maintain compliance with long-term bond issuance guidelines for affordable housing financing.
Who it affects
All Scheduled Commercial Banks (excluding Regional Rural Banks), Housing finance departments and credit officers, Compliance and risk management teams, Priority sector lending teams
Does this master circular introduce any new housing finance rules?
No, it consolidates all existing instructions issued up to March 31, 2022, without adding new requirements.
Are Regional Rural Banks covered under this circular?
No, the scope explicitly excludes Regional Rural Banks.
What documentation is required for a home loan to construct a house?
Banks must obtain a copy of the sanctioned building plan from the competent authority in the borrower's name and an affidavit-cum-undertaking that construction will follow the approved plan.