**Summary:**
This Reserve Bank of India (RBI) circular, DOR.No.BP.BC.2408.12.015/2020-21 dated October 16, 2020, addresses the rationalization of risk weights for individual housing loans issued by all scheduled commercial banks (excluding Local Area Banks and Regional Rural Banks). As a countercyclical measure, the circular revises the risk weights for new housing loans sanctioned on or after October 16, 2020, and up to March 31, 2022, irrespective of the loan amount. The revised risk weights are as follows: for Loan-to-Value (LTV) ratios up to 80%, the risk weight is 35%, and for LTV ratios between 80% and 90%, the risk weight is 50%. The standard asset provision of 0.25% will continue to apply to all such loans. The LTV ratios, Risk Weights, and Standard Asset Provision for all loans sanctioned prior to October 16, 2020, will remain as prescribed in the circular dated June 7, 2017. All other instructions from the June 7, 2017 circular remain unchanged. Contact information for the RBI's Department of Regulation, Central Office is provided: Tel No: 22661602, 22601000; Fax No: 022-2270 5691; Central Office Building, 12th/13th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai 400001.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for monetary policy and regulation of the banking system.
Scheduled Commercial Banks: Banks in India that are listed in the second schedule of the Reserve Bank of India Act, 1934, including Small Finance Banks, but excluding Local Area Banks and Regional Rural Banks.
Individual Housing Loans: Loans provided to individuals for the purpose of purchasing or constructing residential property.
Loan to Value Ratio (LTV): The ratio of the loan amount to the appraised value of the asset.
DBR.BP.BC.No.7208.12.015/2016-17: Reference number of a circular issued by the Reserve Bank of India on June 7, 2017, pertaining to capital charges for individual housing loans.
October 9, 2020: Date of the Statement on Developmental and Regulatory Policies referenced in the document.
Mumbai, Maharashtra: City in India where the central office of the Reserve Bank of India is located.
Prakash Baliarsingh: Chief General Manager at Reserve Bank of India, who signed the circular.
भारतीय �रजवर् ब�क
__________________RESERVE BANK OF INDIA _________________
www.rbi.org.in
RBI/2020-21/56
DOR.No.BP.BC.24/08.12.015/2020-21 October 16, 2020
All Scheduled Commercial Banks
(Including Small Finance Banks,
Excluding Local Area Banks and Regional Rural Banks)
Dear Sir/Madam,
Individual Housing Loans – Rationalisation of Risk Weights
Please refer to paragraph 6 of the Statement on Developmental and Regulatory
Policies dated October 9, 2020 on rationalization of risk weights on Individual
Housing Loans.
2. In terms of circular No. DBR.BP.BC.No.72/08.12.015/2016-17 dated June 7, 2017,
the capital charge for claims secured by residential property falling under the
category of individual housing loans is assigned differential risk weights based on the
size of the loan as well as the loan to value ratio (LTV).
3. As a countercyclical measure, it has been decided to rationalise the risk weights,
irrespective of the amount. The risk weights for all new housing loans to be
sanctioned on or after the date of this circular and upto March 31, 2022 shall be as
under:
LTV Ratio (%) Risk Weight (%)
≤ 80 35
> 80 and ≤ 90 50
__________________________________________________________________
िविनयमनिवभाग क��ीयकायार्लय क��ीयकायार्लयभवन व� व�मंिज़ल शहीदभगत�संहमागर् फोटर् मुंबई
टेलीफोन Tel No: 22661602, 22601000फैक्स Fax No: 022-2270 5691
Department of Regulation, Centr,a l Offi ce, Cen, tral O ffice Bu ilding, ,1 122th// 1133th Floor,, Shah id Bh aga t Si,n gh ,M arg ,- F4o0r0t0, 0M1umbai – 400001
/ /
�हंदी आसान ह,ै इसका �योग बढ़ाइए4. The requirement of standard asset provision of 0.25% shall continue to apply on
all such loans.
5. The LTV ratios, Risk Weights and Standard Asset Provision for all loans sanctioned
prior to the date of this circular shall continue to be as prescribed in terms of the
circular dated June 7, 2017.
6. All other instructions applicable in terms of the circular dated June 7, 2017 remain
unchanged
Yours faithfully,
(Prakash Baliarsingh)
Chief General Manager
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