Executive Summary:
This circular from the Reserve Bank of India (RBI), dated June 8, 2022, revises limits on residential housing loans by rural cooperative banks and permits them to finance Commercial Real Estate-Residential Housing (CRERH) within certain limits. The changes aim to address increased housing prices and customer needs. These instructions are effective from the date of the circular.
Key Points / Main Content:
Individual Housing Loan Limits Enhancement:
* StCBs/DCCBs with assessed net worth less than ₹100 crore: Revised limit is ₹50 lakh per individual borrower (existing limit was ₹20 lakh).
* StCBs/DCCBs with assessed net worth equal to or more than ₹100 crore: Revised limit is ₹75 lakh per individual borrower (existing limit was ₹30 lakh).
Financing Commercial Real Estate-Residential Housing (CRERH):
* StCBs and DCCBs are allowed to extend finance to CRERH within the existing aggregate housing finance limit of 5% of their total assets.
* CRERH includes loans to builders/developers for residential housing projects, excluding captive consumption.
* Projects should ordinarily not include non-residential commercial real estate, but integrated housing projects with limited commercial space (e.g., shopping complex, school) are allowed if the commercial area does not exceed 10% of the total Floor Space Index (FSI).
* A standard asset provision of 0.75% and a risk weight of 75% must be maintained for CRERH advances.
Policy and Review:
* Banks must have a Board-approved policy for financing CRERH.
* A review note on the performance of the CRERH portfolio must be presented to the Board at least on a half-yearly basis.
* All other existing instructions remain unchanged.
Impact Analysis:
State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs):
* Impact: Higher lending limits for individual housing loans and new opportunities to finance CRERH, potentially increasing their loan portfolio and contributing to affordable housing.
* Action Required: Revise lending policies to reflect the increased limits, establish a Board-approved policy for financing CRERH, and implement a half-yearly review process for the CRERH portfolio.
Individual Borrowers:
* Impact: Access to higher housing loan amounts, potentially enabling them to purchase more suitable or larger homes.
* Action Required: Be aware of the revised lending limits when applying for housing loans from StCBs and DCCBs.
Builders/Developers:
* Impact: Access to financing from StCBs and DCCBs for residential housing projects, potentially leading to increased construction of affordable housing.
* Action Required: Understand the criteria for CRERH financing and engage with StCBs and DCCBs to explore funding opportunities for residential projects.
Key Entities Referenced
State Cooperative Banks (StCBs): A type of cooperative bank, specifically State Cooperative Banks, which are being addressed in the circular regarding housing loan limits and financing of Commercial Real Estate Residential Housing (CRERH).
District Central Cooperative Banks (DCCBs): A type of cooperative bank, specifically District Central Cooperative Banks, which are being addressed in the circular regarding housing loan limits and financing of Commercial Real Estate Residential Housing (CRERH).
Commercial Real Estate Residential Housing (CRERH): A category of real estate financing that StCBs and DCCBs are now permitted to extend finance to, subject to certain conditions and limits as defined in the circular.
Department of Regulation, Central Office, Mumbai, Maharashtra: The department and location within the Reserve Bank of India (RBI) responsible for issuing the circular.
Reserve Bank of India (RBI): The central bank of India, which issued the circular regarding housing loan limits and CRERH financing for cooperative banks.
Individual Housing Loans: Loans provided to individual borrowers for residential housing, with revised limits specified for different categories of cooperative banks based on their net worth.
Primary Urban Cooperative Banks (UCBs): A type of cooperative bank for which individual housing loan limits have been revised as per the statement on developmental and regulatory policies
Rural Cooperative Banks (RCBs): A type of cooperative bank comprising State Cooperative Banks and District Central Cooperative Banks for which individual housing loan limits have been revised as per the statement on developmental and regulatory policies
RBI/2022-23/67
DOR.CRE.REC.43/09.22.010/2022-23 June 08, 2022
All State Co-operative Banks (StCBs)
All District Central Co-operative Banks (DCCBs)
Madam / Dear Sir,
Enhancement in Individual Housing Loan limits and credit to Commercial Real
Estate - Residential Housing (CRE-RH)
Please refer to our circulars RPCD CO.RCBD.BC.No.15 /03.03.01/2009-10 dated
August 13, 2009, RPCD.CO.RF.BC.No.109/07.38.01/2008-09 dated May 25, 2009
and RPCD.CO.RCBD. BC.No. 48 /03.03.01/2010-11 dated January 20, 2011 issued
on the above subject.
2. As announced in the Statement on Developmental and Regulatory Policies (para
no.1 & 2 annexed), it has been decided to revise the limits on residential housing loans
sanctioned by rural co-operative banks to an individual borrower as under:
Existing Limit Revised Limit
Category of the bank (per individual (per individual
borrower) borrower)
(a) StCBs/DCCBs having assessed ₹20 lakh ₹50 lakh
net worth less than ₹100 crore
(b) StCBs/DCCBs having assessed ₹30 lakh ₹75 lakh
net worth equal to or more than
₹100 crore
3. Further, 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% of their total assets. For this purpose, CRE-RH shall consist
of loans to builders/developers for residential housing projects (except for captive
__________________________________________________________________
िविनयमन िवभाग, क��ीय कायार्लय, क��ीय कायार्लय भवन, 12व�/ 13व� मंिज़ल, शहीद भगत �संह माग,र् फोटर्, मुंबई - 400001
टेलीफोन/ Tel No: 22661602, 22601000 फैक्स/ Fax No: 022-2270 5691
Department of Regulation, Central Office, Central Office Building, 12th/ 13th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001
�हदं ी आसान ह,ै इसका �योग बढ़ाइएconsumption). Such projects should ordinarily not include non-residential commercial
real estate. However, integrated housing projects comprising some commercial space
(e.g. shopping complex, school, etc.) can also be classified under CRE-RH, provided
that the commercial area in the residential housing project does not exceed 10% of
the total Floor Space Index (FSI) of the project. Standard asset provision of 0.75% and
risk weight of 75% shall be maintained for CRE-RH advances.
4. Banks shall have a Board-approved policy for financing CRE-RH and a review note
on the performance of the CRE-RH portfolio shall be placed before the Board at least
on a half-yearly basis. All other extant instructions in the matter shall remain
unchanged. The above instructions will come into effect from the date of this circular.
Yours faithfully,
(Manoranjan Mishra)
Chief General ManagerExtract from Statement on Developmental and Regulatory
Policies June 08, 2022
1. Individual Housing Loans by Cooperative Banks – Enhancement in Limits
Extant guidelines prescribe prudential limits on the amount of individual housing loans
that can be extended by Primary (Urban) Co-operative Banks (UCBs), and Rural
Cooperative Banks (RCBs - State Cooperative Banks and District Central Cooperative
Banks) to their customers. These limits were last revised for UCBs in 2011 and for
RCBs in 2009. 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. Accordingly, the limits
for Tier I /Tier II UCBs shall stand revised from ₹30 lakh/ ₹70 lakh to ₹60 lakh/ ₹140
lakh, respectively. As regards RCBs, the limits shall increase from ₹20 lakh to ₹50
lakh for RCBs with assessed net worth less than ₹100 crore; and from ₹30 lakh to ₹75
lakh for other RCBs. A detailed circular will be issued separately.
2. Permitting Rural Co-operative Banks (RCBs) to Lend to Commercial Real Estate
- Residential Housing (CRE-RH) Sector
As per the extant guidelines, State Co-operative Banks (StCBs) and District Central
Co-operative Banks (DCCBs) are 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. A detailed circular will be issued separately.