Individual Housing Loan Cap For Cooperative Lenders Doubled

The Reserve Bank on Wednesday doubled the maximum loan amount that a cooperative bank can lend to an individual to up to Rs 1.40 crore 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.

RBI Governor Shaktikanta Das announced that urban cooperative banks will now be allowed to lend up to Rs 1.40 crore as against the previous cap of Rs 70 lakh, while rural cooperative banks can now lend up to Rs 75 lakh as against the earlier cap of Rs 30 lakh.

“Taking into account the increase in housing prices since the limits were last revised and considering the customer needs, it has been decided to increase the existing limits on individual housing loans by cooperative banks,” Das said.

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.

The Governor said urban cooperative lenders are classified into tier-I and tier-II, and the maximum loan amount cap will be governed by how a bank is recognized.

Rural cooperative banks include State Cooperative Banks and District Central Cooperative Banks, and their net worth will determine the maximum permissible loan limits, he said.

Those with a net worth of up to Rs 100 crore will now be able to lend up to Rs 50 lakh per individual housing loan as against the previous cap of Rs 20 lakh, while the others can give loans of up to Rs 75 lakh, Das said.

In what can get a cheer to the developers, Das also announced that rural cooperative banks will now be permitted to lend to builders who have launched residential projects, which they are currently prohibited from.

Das said the decision has been taken considering the growing need for affordable housing and to realize their potential in providing credit facilities to the housing sector.

He said the overall housing finance limit for rural cooperative banks is unchanged at 5 per cent, and the lenders will have to extend the Commercial Real Estate – Residential Housing loans within the aggregate limit.

Meanwhile, the RBI has also decided to permit urban cooperative banks to allow doorstep banking services to help the elderly and differently-abled segments, Das said.