RBI hikes housing loan limits for co-op banks, allows CRE-RH lending

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 980 kb ) Enhancement in Individual Housing Loan limits and credit to Commercial Real Estate - Residential Housing (CRE-RH) RBI/2022-23/67 DOR.CRE.REC.43/09.22.010/2022-23 June 08, 2022 All State Co-operative Banks (StCBs) All District Central Co-operative Banks (DCCBs) Madam / Dear Sir, Enhancement in Individual Housing Loan limits and credit to Commercial Real Estate - Residential Housing (CRE-RH) Please refer to our circulars RPCD CO.RCBD.BC.No.15 /03.03.01/2009-10 dated August 13, 2009 , RPCD.CO.RF.BC.No.109/07.38.01/2008-09 dated May 25, 2009 and RPCD.CO.RCBD. BC.No. 48 /03.03.01/2010-11 dated January 20, 2011 issued on the above subject. 2. As announced in the Statement on Developmental and Regulatory Policies ( para no.1 & 2 annexed ), it has been decided to revise the limits on residential housing loans sanctioned by rural co-operative banks to an individual borrower as under: Category of the bank Existing Limit (per individual borrower) Revised Limit (per individual borrower) (a) StCBs/DCCBs having assessed net worth less than ₹100 crore ₹20 lakh ₹50 lakh (b) StCBs/DCCBs having assessed net worth equal to or more than ₹100 crore ₹30 lakh ₹75 lakh 3. Further, it has been decided to allow StCBs and DCCBs to extend finance to Commercial Real Estate-Residential Housing (CRE-RH) within the existing aggregate housing finance limit of 5% of their total assets. For this purpose, CRE-RH shall consist of loans to builders/developers for residential housing projects (except for captive consumption). Such projects should ordinarily not include non-residential commercial real estate. However, integrated housing projects comprising some commercial space (e.g. shopping complex, school, etc.) can also be classified under CRE-RH, provided that the commercial area in the residential housing project does not exceed 10% of the total Floor Space Index (FSI) of the project. Standard asset provision of 0.75% and risk weight of 75% shall be maintained for CRE-RH advances. 4. Banks shall have a Board-approved policy for financing CRE-RH and a review note on the performance of the CRE-RH portfolio shall be placed before the Board at least on a half-yearly basis. All other extant instructions in the matter shall remain unchanged. The above instructions will come into effect from the date of this circular. Yours faithfully, (Manoranjan Mishra) Chief General Manager Extract from Statement on Developmental and Regulatory Policies June 08, 2022 1. Individual Housing Loans by Cooperative Banks – Enhancement in Limits Extant guidelines prescribe prudential limits on the amount of individual housing loans that can be extended by Primary (Urban) Co-operative Banks (UCBs), and Rural Cooperative Banks (RCBs - State Cooperative Banks and District Central Cooperative Banks) to their customers. These limits were last revised for UCBs in 2011 and for RCBs in 2009. Taking into account the increase in housing prices since the limits were last revised and considering the customer needs, it has been decided to increase the existing limits on individual housing loans by cooperative banks. Accordingly, the limits for Tier I /Tier II UCBs shall stand revised from ₹30 lakh/ ₹70 lakh to ₹60 lakh/ ₹140 lakh, respectively. As regards RCBs, the limits shall increase from ₹20 lakh to ₹50 lakh for RCBs with assessed net worth less than ₹100 crore; and from ₹30 lakh to ₹75 lakh for other RCBs. A detailed circular will be issued separately. 2. Permitting Rural Co-operative Banks (RCBs) to Lend to Commercial Real Estate - Residential Housing (CRE-RH) Sector As per the extant guidelines, State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs) are prohibited from extending loans to the commercial real estate sector. Considering the growing need for affordable housing and to realise their potential in providing credit facilities to the housing sector, it has been decided to allow StCBs and DCCBs to extend finance to Commercial Real Estate – Residential Housing (CRE-RH) within the existing aggregate housing finance limit of 5 per cent of their total assets. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2022-23/67 · issued 08 Jun 2022. The plain-English explanation above is BankPulse’s own independent summary.

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