RBI raises housing loan limits for co-operative banks; Urban cooperatives allowed door-to-door services


The Reserve Bank of India (RBI) on Wednesday raised by more than 100% the limits for individual housing loans issued by Urban Cooperative Banks (UCBs) and Rural Cooperative Banks (RCBs). Announcing the decision, RBI Governor Shaktikanta Das said it would facilitate better flow of credit to the housing sector.

Individual home loan limits for UBCs and RCBs were last set in 2011 and 2009, respectively, and have now been revised to reflect rising house prices.

Ramesh Nair, CEO (India) and MD (Market Development-Asia) of Colliers, said: “The RBI has clearly emphasized the important role that cooperative banks can play in increasing credit flows in the housing sector while promoting financial inclusion.

He added that the central bank has revised upwards the upper limit of more than 100% up to which urban cooperative banks and rural cooperative banks can lend to home buyers. “This will improve credit, especially in semi-urban and rural areas where cooperative banks have deeper penetration.”

The RBI has also proposed to allow BCRs (including State Co-operative Banks and District Central Co-operative Banks) to extend financing to “Commercial Property – Residential Housing”, within the current limit of overall financing of the housing 5% of their total assets. “This decision is in line with the exemption enjoyed by regular commercial banks (SCBs) and UCBs. This measure will further increase credit flows from cooperative banks to the housing sector,” Das said in announcing the decision.

“This will open up a huge funding window in Tier II and Tier III cities. Co-operative banks can now lend funds to developers for housing projects. This should give a major boost to affordable housing projects in these cities and tap into the strong latent demand,” Colliers’ Nair said.

The RBI has also decided to allow UCBs to extend home banking services to their customers. “It was also decided to allow UCBs to extend home banking services to their customers. This will enable UCB to meet the needs of its customers, especially the elderly and people with disabilities,” Das said.

V Swaminathan, Executive Chairman of Andromeda and Apnapaisa, said that the RBI has seen cooperative banks as equal partners in growth, and therefore raised their lending limit by 100%. “This means that these banks can now lend twice the amount they have done so far. This move can be seen as a major boost for the real estate sector as it will now improve the availability of easy credit for the segment. residential housing.

Aarti Khanna, Founder and CEO of Askcred.com, said the RBI has increased existing limits on individual housing loans by co-operative banks for both urban co-operative banks and rural co-operative banks. This is a welcome move given that the limits were last revised almost a decade ago and with rising housing and property prices, an increase in the limit was needed. . “It would give some boost to the affordable housing segment.”

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