What changed
The RBI revised individual housing loan limits for rural co-operative banks (StCBs/DCCBs), doubling or more the previous caps based on assessed net worth. Additionally, it allowed these banks to extend finance to Commercial Real Estate-Residential Housing (CRE-RH) for the first time, subject to the existing 5% of total assets aggregate housing finance limit.
What it means for you
Co-operative banks can now offer larger home loans to individual borrowers, aligning limits with current housing prices and customer demand. The CRE-RH permission opens a new lending avenue to builders for residential projects, but banks must maintain a 0.75% standard asset provision and 75% risk weight on such advances, and have a Board-approved policy with half-yearly portfolio reviews.
What you must do
- Update your Board-approved housing loan policy to reflect the new individual loan limits for StCBs/DCCBs.
- Create or revise a Board-approved policy for CRE-RH lending, ensuring compliance with the 5% aggregate housing finance cap.
- Set up a half-yearly review mechanism for the CRE-RH portfolio and report performance to the Board.
- Train credit staff on the new CRE-RH classification rules, including the 10% commercial FSI threshold for integrated projects.
- Monitor standard asset provisioning (0.75%) and risk weight (75%) for all CRE-RH advances.
Who it affects
State Co-operative Banks (StCBs), District Central Co-operative Banks (DCCBs), Individual housing loan borrowers of these banks, Builders and developers in the residential housing sector
What are the new individual housing loan limits for StCBs/DCCBs?
For banks with assessed net worth less than ₹100 crore, the limit increased from ₹20 lakh to ₹50 lakh per borrower. For those with net worth equal to or more than ₹100 crore, the limit rose from ₹30 lakh to ₹75 lakh.
Can StCBs/DCCBs now lend to commercial real estate projects?
Yes, but only for Commercial Real Estate-Residential Housing (CRE-RH), which includes loans to builders for residential housing projects. Such projects must not have non-residential commercial space exceeding 10% of total FSI. This lending is within the existing 5% of total assets aggregate housing finance limit.
What provisioning and risk weight apply to CRE-RH advances?
Standard asset provisioning of 0.75% and a risk weight of 75% must be maintained for CRE-RH advances. Banks also need a Board-approved policy and half-yearly portfolio review.