**Policy Summary: RBI/2019-20/176 DOR.No.BP.BC.41/08.12.014/2019-20**
**Date:** March 17, 2020
**Subject:** Issue of Long Term Bonds by Banks: Financing of Infrastructure and Affordable Housing
**Issuing Authority:** Reserve Bank of India (RBI)
**Addressees:** All Scheduled Commercial Banks (excluding RRBs)
**Purpose:** This circular updates and aligns the definition of lending to affordable housing, specifically for the purpose of issuing long-term bonds by banks, with the harmonized master list (HML) of infrastructure subsectors issued by the Department of Economic Affairs, Ministry of Finance, Government of India.
**Key Changes:**
* **Affordable Housing Definition:** The definition of "affordable housing" for long-term bond issuances is now aligned with the HML. This means that banks and FIs shall continue to follow the definition of affordable housing projects as per the definition in the HML, as amended from time to time. Affordable Housing is defined as a housing project using at least 50% of the Floor Area Ratio (FAR)/Floor Space Index (FSI) for dwelling units with carpet area of not more than 60 square meters. Carpet Area shall have the same meaning as assigned to it in clause (k) of section 2 of the Real Estate Regulation and Development Act, 2016.
* **Revised Definition for Long-Term Bonds:** Lending to affordable housing for individual units has been revised. Housing loans eligible to be classified under priority sector lending as updated from time to time and housing loans to individuals for acquiring dwelling units and also housing loans to individuals within the prescribed threshold under the affordable housing definition in the HML.
* **Existing Definition (Superseded):** Housing loans eligible under priority sector lending by the RBI.
* **Continuity:** All other instructions regarding the issuance of long-term bonds and lending to the infrastructure sector, as outlined in previous circulars, remain unchanged. Specifically, circular DBOD.BP.BC.No.25/08.12.014/2014-15 dated July 15, 2014, and circular DBR.BP.BC.No.4/08.12.014/2016-17 dated December 1, 2016, remain in effect, except where specifically modified by this circular.
**Reference Documents:**
* Circular DBOD.BP.BC.No.25/08.12.014/2014-15 dated July 15, 2014
* Circular DBR.BP.BC.No.4/08.12.014/2016-17 dated December 1, 2016
* Gazette notification issued by the Department of Economic Affairs, Ministry of Finance, Government of India, dated March 30, 2017 (Harmonized Master List of infrastructure sub-sectors).
* Real Estate Regulation and Development Act, 2016.
**Contact:**
Saurav Sinha
Chief General Manager in-charge
Key Entities Referenced
Reserve Bank of India: India's central bank, referred to as RBI in the document.
All Scheduled Commercial Banks: Refers to all commercial banks excluding Regional Rural Banks (RRBs) in India that are regulated by the RBI.
Infrastructure Lending: A type of lending related to the development of infrastructure projects.
Affordable Housing: Housing projects that meet certain criteria related to size and cost, and are included in the harmonised master list (HML) of infrastructure subsectors.
Harmonised Master List: A list of infrastructure subsectors issued by the Department of Economic Affairs, Ministry of Finance, Government of India.
Real Estate Regulation and Development Act, 2016: An act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry.
Priority Sector Lending: A scheme by Reserve Bank of India, where banks have to lend a certain portion of their funds to specified sectors, like agriculture, small businesses, education, housing etc.
Mumbai, Maharashtra: One of the six metropolitan centers mentioned in the context of affordable housing loans.
RBI/2019-20/176
DOR.No.BP.BC.41/08.12.014/2019-20 March 17, 2020
All Scheduled Commercial Banks
(excluding RRBs)
Madam / Dear Sir,
Issue of Long Term Bonds by Banks – Financing of Infrastructure and
Affordable Housing
Please refer to the circular DBOD.BP.BC.No.25/08.12.014/2014-15 dated July 15,
2014 and subsequent circulars on the above subject. Also refer to the circular
DBR.BP.BC.No.42/08.12.014/2016-17 dated December 1, 2016 advising that for the
purpose of definition of ‘Infrastructure Lending’, banks and select All India Term-
Lending and Refinancing Institutions may be guided by the Gazette Notifications
issued by the Department of Economic Affairs, Ministry of Finance, Government of
India, from time to time.
2. For the purpose of circular dated July 15, 2014 mentioned above, ‘Infrastructure
Sub-sectors’ and ‘affordable housing’ have been defined under paragraphs 2(i) and
2(ii) of the Annex therein. Affordable housing1 has since been included in the
harmonised master list (HML) of infrastructure subsectors issued vide gazette
notification dated March 30, 2017. For lending to infrastructure sector, banks/FIs shall
continue to follow the definition of affordable housing projects as per the definition in
the HML, as amended from time to time.
1 “Affordable Housing” is defined as a housing project using at least 50% of the Floor Area Ratio (FAR)/Floor
Space Index (FSI) for dwelling units with carpet area@ of not more than 60 square meters.
@ “Carpet Area” shall have the same meaning as assigned to it in clause (k) of section 2 of the Real Estate
(Regulation and Development) Act, 2016.3. On account of inclusion of affordable housing under the HML, it has now been
decided to align the definition of lending to affordable housing under the above-
mentioned circular dated July 15, 2014 with the definition provided in the HML of
infrastructure subsectors. Accordingly, for the purpose of issue of long terms bonds, it
is advised as under:
Lending to affordable housing for individual units
Existing definition Revised definition
Housing loans eligible under priority Housing loans eligible to be classified
sector lending by the RBI (please see the under priority sector lending (as updated
Appendix to the circular dated July 15, from time to time) and housing loans to
2014 and as updated from time to time), individuals for acquiring dwelling units
and also housing loans to individuals within the prescribed threshold under the
upto Rs. 50 lakhs for houses of values affordable housing definition in the HML.
upto Rs. 65 lakhs located in the six
metropolitan centres viz. Mumbai, New
Delhi, Chennai, Kolkata, Bengaluru and
Hyderabad and Rs. 40 lakhs for houses
of values upto Rs. 50 lakhs in other
centres for purchase/construction of
dwelling unit per family.
4. All other instructions on issue of long term bonds and lending to infrastructure sector
remain unchanged.
Yours faithfully,
(Saurav Sinha)
Chief General Manager in-charge