Home loan limit doubles for individual borrowers in co-operative banks

The Reserve Bank of India (RBI) has increased the upper limit of home loan amount by at least 100% for the individual borrowers of Primary (Urban) Co-operative Banks (UCBs) and Rural Cooperative Banks (RCBs – State Cooperative Banks and District Central Cooperative Banks).

The revision of these limits has happened after a gap of 11 years as these were last revised for UCBs in 2011 and for RCBs in 2009. According to the announcement made by RBI today, for UCBs in Tier I cities the previous limit was Rs 30 lakh which has now been revised to Rs 60 lakh. Similarly, for Tier II cities the limit has been increased from Rs 70 lakh to Rs 1.4 crore.

“This is a welcome move considering that limits were last revised almost a decade ago and with the increase in housing and real estate prices, increasing the limit was needed. This would give some uplift to the affordable housing segment,” says Aarti Khanna, Founder and CEO Askcred.com.

The increase in limits is even higher increase for RCBs. For rural co-operative banks, the limit has been increased from Rs 20 lakh to Rs 50 lakh for RCBs with assessed net worth less than Rs 100 crore; and from Rs 30 lakh to Rs 75 lakh for other RCBs. RBI will issue a detailed circular separately.

“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,” said the statement from RBI.

Rural co-operative allowed to extend commercial finance in residential housing segment

To support the residential housing growth in rural areas the RBI has opened a window for commercial real estate developers to access finance from State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs), which were earlier prohibited from extending loans to the commercial real estate sector.

“Considering the growing need for affordable housing and to realise their potential in providing credit facilities to the housing sector, it has been decided to allow StCBs and DCCBs to extend finance to Commercial Real Estate – Residential Housing (CRE-RH) within the existing aggregate housing finance limit of 5 per cent of their total assets,” said the RBI statement. The central bank will issue a detailed circular separately.

With commercial developer getting access to new avenue the housing options in residential segment will get a boost in rural areas.

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