RBI increases cooperative banks’ house loan ceiling to Rs 20 lakh

After reviewing the situation,the apex bank decided to jack up the maximum quantum of housing loan to Rs 20 lakh. However,in case of a bank having a net worth of Rs 100 crore and above,as per the assessment made in the latest inspection report of the National Bank for Agriculture and Rural Development,the limit will be Rs 30 lakh.

RBI has also increased the aggregate of housing loans outstanding on any day against individuals,institutions,and societies from five to 10 per cent of the total loans and advances of the bank as on March 31 of the preceding year. But this limit can be exceeded to the extent of funds obtained for the purpose from the higher financing agency and re-finance from the National Housing Bank,RBI has said.

It has also clarified that housing loans would not include finance to commercial real estate sector. It has been made clear to cooperative banks that they should desist from financing the commercial real estate sector. For repairs,additions and alterations to the existing houses,the maximum amount of loan per individual borrower has also been increased to Rs 1 lakh.

“This will not only ease resource related problems of the housing sector,but also enable banks to lend more money to the people who have good repaying capacity but could not get loans due to limited lending capacity of the cooperative banks,” said Ghanshyam Amin,Chairman of the National Cooperative Union.

Jyotindra Mehta,Chairman of the Gujarat Urban Cooperative Banks Federation has welcomed the move. He said this will place them in a better position to compete with nationalised banks in the housing finance segment.

“Cooperative banks will also serve the middle class — their niche area — better by providing higher loans at competitive rates,” Mehta added.