Home loan borrowers rejoice! RBI increases housing loan limit by 100%

New Delhi: The Reserve Bank of India (RBI) on Wednesday raised the loan amount that cooperative banks can lend to an individual by 100 percent in view of the surge in housing prices. The guidelines governing the maximum permissible loan limits for cooperative lenders were last reviewed over a decade ago.

Considering the importance of cooperative banks in promoting inclusive growth, the Reserve Bank of India announced three measures for the cooperative banking sector:

1. The limits for individual housing loans being extended by Urban Cooperative Banks (UCBs) and Rural Cooperative Banks (RCBs- State Cooperative Banks and District Central Cooperative Banks) which were last fixed in 2011 and 2009 respectively are being revised upwards by over 100 per cent taking into account increase in house prices. This will facilitate better flow of credit to the housing sector.

2. In line with the dispensation available to Scheduled Commercial Banks (SCBs) and UCBs, it is now proposed to permit Rural Cooperative Banks (RCBs- State Cooperative Banks and District Central Cooperative Banks) to extend finance to ‘commercial real estate – residential housing’ (i.e. loans for residential housing projects), within the existing aggregate housing finance limit of 5% of their total assets. This measure will further augment credit flows from the cooperative banks to the housing sector.

3. It has also been decided to permit UCBs to extend doorstep banking services to their customers. This will enable UCBs to meet the needs of their customers, especially senior citizens and differently abled.

RBI Governor Shaktikanta Das, who made the announcement along with the other measures in the bi-monthly policy review, added that a detailed circular on the same will be issued separately.

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