What changed
This master circular replaces the previous one dated April 1, 2022, consolidating all housing finance guidelines issued up to March 31, 2023. It updates references and includes all circulars listed in the appendix. No new policy changes were introduced; it is purely a consolidation exercise.
What it means for you
Banks now have a single reference document for housing finance regulations, reducing compliance complexity. The circular reinforces existing rules on land acquisition, construction loans, and anti-speculation measures. Lenders must ensure their housing loan policies align with these consolidated instructions to avoid regulatory gaps.
What you must do
- Review and update internal housing finance policies to align with this master circular.
- Ensure loan sanction processes include obtaining sanctioned building plans and borrower affidavits for construction loans.
- Verify that priority sector housing loan classification and affordable housing bond issuance comply with the circular.
- Train credit staff on the consolidated guidelines, especially regarding land purchase declarations and second home loans.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Housing finance departments, Credit risk and compliance teams, Priority sector lending divisions
Does this master circular introduce any new housing finance rules?
No, it consolidates existing instructions issued up to March 31, 2023, without adding new requirements. Banks should refer to this circular as a single source for all housing finance guidelines.
What are the key conditions for financing land purchase?
Banks can finance land purchase only if the borrower declares intent to construct a house on the plot within a period set by the bank. This ensures credit is used for construction, not speculation.
Are there specific rules for loans to slum dwellers?
Yes, banks may extend credit directly to slum dwellers with government guarantee or indirectly through state governments for slum improvement schemes. This supports affordable housing objectives.