RBI enhances Individual Housing Loan limits and credit to Commercial Real Estate – Residential Housing [Read Circular]

As announced in the Statement on Developmental and Regulatory Policies, it has been decided by the Reserve Bank of India to revise the limits on residential housing loans sanctioned by rural co-operative banks to an individual borrower.

The revision in limits are as under :–

State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs) having assessed net worth less than ₹100 crore –

Existing Limit: ₹20 lakh         

Revised Limit: ₹50 lakh

State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs) having assessed net worth equal to or more than ₹100 crore–

Existing Limit: ₹30 lakh

Revised Limit: ₹75 lakh

Both the revised limits are applicable per individual borrower.

RBI also decided to allow State Co-operative Banks (StCBs) and District Central Co-operative Banks (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, Commercial Real Estate-Residential Housing (CRE-RH) shall consist of loans to builders/developers for residential housing projects (except for captive consumption). Such projects should ordinarily not include non-residential commercial real estate”, the RBI notification clarified.

“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”, the notification stated.

A Board-approved policy for financing CRE-RH and half-yearly performance review of CRE-RH portfolio were also mandated. All other extant instructions in the matter were left unchanged. The above instructions came into effect from the date of the circular, 30-12-2022, signed by Chief General Manager of RBI, Manoranjan Mishra.

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