What changed
RBI issued a consolidated Master Circular (RBI/2023-24/15 DOR.CRE.REC.No.9/07.10.002/2023-24) on housing finance for UCBs, referencing the June 23, 2022 circular. It consolidates and updates all existing instructions on eligible borrowers, loan terms, margins, and priority sector treatment.
What it means for you
UCBs gain flexibility to decide loan amounts and margins based on commercial judgment and board approval, subject to borrower repaying capacity. This supports their role in priority sector housing credit, especially for weaker sections, while ensuring prudential norms.
What you must do
- Review and update your housing finance policy to align with the consolidated Master Circular.
- Ensure board-approved policies define loan amounts, margins, and terms for eligible borrowers.
- Verify that housing loans to weaker sections (EWS, LIG, MIG) meet priority sector lending limits.
- Train credit staff on updated borrower categories and eligible housing schemes.
Who it affects
Primary (Urban) Co-operative Banks (UCBs), Housing finance departments of UCBs, Borrowers seeking housing loans from UCBs
What is the key change in this Master Circular for UCBs?
It consolidates all prior housing finance instructions into one circular, giving UCBs more flexibility to set loan amounts and margins based on board-approved policies and borrower repaying capacity.
Are housing loans to weaker sections still part of priority sector?
Yes, housing finance to specified categories up to prescribed limits is treated as priority sector lending, consistent with social objectives.
Do UCBs need RBI approval for each housing loan?
No, UCBs can grant loans based on their commercial judgment and board-approved policies, without needing special permission for each case.