In its latest move, the Reserve Bank of India (RBI) has allowed cooperative banks to raise the ceiling on housing loans by four times to Rs 20 lakh. This is expected to go a long way in improving money supply in the housing sector and give better credit options to the buyers.

At present, the maximum quantum of housing loan that can be granted by a state or a central co-operative bank to an individual borrower stands at Rs 5 lakh. It is subject to the condition that the aggregate housing loans outstanding on any day against individuals, institutions and societies should not exceed five per cent of the bank’s total deposits. For repairs, additions and alterations among others to the existing houses, the maximum amount of loan per individual borrower stands at Rs 50,000.

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.

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