What changed
RBI revised the maximum individual housing loan amount for Primary (Urban) Co-operative Banks. For Tier-I UCBs, the limit increased from ₹30 lakh to ₹60 lakh per borrower. For Tier-II UCBs, the limit doubled from ₹70 lakh to ₹140 lakh per borrower. The revision applies from the date of the circular and all other existing instructions remain unchanged.
What it means for you
UCBs can now offer larger housing loans to individual customers, aligning with rising property prices and customer demand. This enhances their competitiveness against commercial banks in the home loan segment. Banks must still adhere to prudential exposure limits and other regulatory norms while sanctioning these higher loan amounts.
What you must do
- Update internal loan sanction policies and system limits to reflect the new caps of ₹60 lakh for Tier-I and ₹140 lakh for Tier-II UCBs.
- Ensure compliance with prudential exposure limits and other extant instructions when sanctioning loans under the revised limits.
- Communicate the revised limits to loan officers and credit teams to enable consistent application from the effective date.
- Review and adjust risk assessment frameworks to account for higher individual exposures in housing loans.
Who it affects
Primary (Urban) Co-operative Banks (Tier-I and Tier-II), Individual borrowers seeking housing loans from UCBs, Credit and risk management teams at UCBs
Do these revised limits apply to Rural Co-operative Banks (RCBs) as well?
No, this circular specifically addresses Urban Co-operative Banks. A separate circular for RCBs was announced in the same policy statement, with limits increasing to ₹50 lakh or ₹75 lakh depending on net worth, but that is not covered in this document.
Are there any additional conditions attached to the higher loan limits?
The circular states that all other extant instructions remain unchanged. Banks must continue to follow prescribed prudential exposure limits and other regulatory norms while sanctioning loans up to the new caps.
From when are these new limits effective?
The instructions came into effect from the date of the circular, i.e., June 8, 2022.