What changed
Earlier, the maximum loan for repairs/additions/alterations to dwelling units was ₹2 lakh in rural/semi-urban areas and ₹5 lakh in urban areas. Now, the ceiling is revised to ₹10 lakh for metropolitan centres (population 10 lakh and above) and ₹6 lakh for all other centres.
What it means for you
Urban co-operative banks can now offer larger housing repair loans, potentially boosting their housing loan portfolios. This aligns with rising construction costs and may increase demand for such loans, but banks must ensure prudent underwriting and adherence to other housing finance norms.
What you must do
- Update internal loan policy and sanction limits for housing repair loans to reflect new ceilings.
- Train credit officers on revised limits and ensure proper documentation for metro vs. other centres.
- Review existing loan applications pending approval to apply the new limits where applicable.
- Communicate the revised limits to customers through branches and digital channels.
Who it affects
Primary Urban Co-operative Banks, Individual borrowers seeking housing repair loans, Credit departments of urban co-operative banks
What are the new loan limits for housing repairs?
For metropolitan centres (population 10 lakh and above), the ceiling is ₹10 lakh. For all other centres, it is ₹6 lakh.
Does this circular apply to all co-operative banks?
It applies specifically to Primary (Urban) Co-operative Banks, as addressed in the circular.
When do these revised limits take effect?
The circular is dated May 24, 2022, and is effective from that date.