What changed
RBI increased the maximum individual housing loan limit for Tier-I UCBs from ₹25 lakh to ₹30 lakh, and for Tier-II UCBs from ₹50 lakh to ₹70 lakh. The maximum repayment period for all UCB housing loans was extended from 15 years to 20 years, including any moratorium period.
What it means for you
UCBs can now offer larger housing loans, potentially boosting their home loan portfolios and competitiveness. The longer repayment period reduces monthly installments for borrowers, making loans more affordable but extending credit risk duration for banks.
What you must do
- Update internal housing loan product limits and repayment terms to align with new caps.
- Review prudential exposure limits to ensure compliance with the revised loan ceilings.
- Communicate revised loan parameters to branches and loan officers for consistent implementation.
- Monitor borrower repayment capacity given the extended tenure of up to 20 years.
Who it affects
All Primary (Urban) Co-operative Banks (UCBs), Tier-I UCBs, Tier-II UCBs, Individual housing loan borrowers of UCBs
What are the new housing loan limits for Tier-I and Tier-II UCBs?
Tier-I UCBs can now lend up to ₹30 lakh per beneficiary, and Tier-II UCBs up to ₹70 lakh per beneficiary, subject to prudential exposure norms.
Is the repayment period increase applicable to existing housing loans?
The circular does not specify retroactive application; it applies to new loans granted after the circular date. Existing loans remain under original terms unless otherwise advised.
Does the extended repayment period include moratorium or repayment holiday?
Yes, the maximum repayment period of 20 years includes any period of moratorium or repayment holiday.